Setting a Higher Price

[Christopher B. Thomas]

Its common here on the forum to see inspectors upset about inspectors pricing an inspection too low.

Here is the thought that goes through my head when I see an inspection price, lets use a home purchase inspection as an example.

2000 SF house - $249 home inspection.

1 hour preparation for the inspection (Permits, Scheduling)
3.5 Infield Inspection
3.5 Hours Creating and Reviewing Paperwork
1 Hour Explaining Report to Client
1 Hour Misc Customer Service

Total 10 Hours

Now lets add costs (Assuming 10 Inspections / Month)
Inspection Software - $10
E & O Insurance - $10
GL Insurance - $5
Auto Costs - $25
Taxes - $20
Marketing - $19

Net Inspection Fee $249 - $89 = $160

$160 / 10 hours = $16 per hour.

Now here is the worst part. What if the inspections slow down? Get hurt? Lawsuit?

I have a business education and I know the idea of underpricing in order to get a piece of the market. That really is a good idea for an industry giant. Walmart is a perfect example. They have the resources and the volume to really cut prices.

So whats the solution? Well if you have lower prices you must do more volume. Sounds good right? Well the problem is either you work so much that you no longer have a personal life, or your work quality can suffer.

The point I am making is that I understand that sometimes it feels that you have to drop prices to get work. I have seen inspection prices so low the inspector either cut corners or didn't make much money on the work.

The next time a client calls you for an inspection listen to what they need. Take a few minutes and let your potential client know the effort you are going to provide. Ask for the price you know your work is worth. Don't worry about what the competition charges. If you have created interest in your service the potential client should provide hints they feel your price is too high. Occasionally you may have to alter your price but more often than not if you have accomplished creating value in your service you will get the price you DESERVE for your service.

Look at the closing documents on the next real estate sale you are a part of. If you are charging $249 for an inspection your service is by far the cheapest per hour than most any other fee. Who is going to be left holding the bag when there is a problem discovered? The realtor? Title Company? No, you.

[Steven Taylor]

You forgot to add taxes, marketing expenses, and % profit into your analysis.

[Christopher B. Thomas]

Great point. I have added $20 for taxes (rough estimate) and $19 for marketing.

[Linas Dapkus]

Originally Posted by cthomas

Its common here on the forum to see inspectors upset about inspectors pricing an inspection too low.

Here is the thought that goes through my head when I see an inspection price, lets use a home purchase inspection as an example.

2000 SF house - $249 home inspection.

1 hour preparation for the inspection (Permits, Scheduling)
3.5 Infield Inspection
3.5 Hours Creating and Reviewing Paperwork
1 Hour Explaining Report to Client
1 Hour Misc Customer Service

Total 10 Hours

Now lets add costs (Assuming 10 Inspections / Month)
Inspection Software - $10
E & O Insurance - $10
GL Insurance - $5
Auto Costs - $25
Taxes - $20
Marketing - $19

Net Inspection Fee $249 - $89 = $160

$160 / 10 hours = $16 per hour.

Now here is the worst part. What if the inspections slow down? Get hurt? Lawsuit?

I have a business education and I know the idea of underpricing in order to get a piece of the market. That really is a good idea for an industry giant. Walmart is a perfect example. They have the resources and the volume to really cut prices.

So whats the solution? Well if you have lower prices you must do more volume. Sounds good right? Well the problem is either you work so much that you no longer have a personal life, or your work quality can suffer.

The point I am making is that I understand that sometimes it feels that you have to drop prices to get work. I have seen inspection prices so low the inspector either cut corners or didn't make much money on the work.

The next time a client calls you for an inspection listen to what they need. Take a few minutes and let your potential client know the effort you are going to provide. Ask for the price you know your work is worth. Don't worry about what the competition charges. If you have created interest in your service the potential client should provide hints they feel your price is too high. Occasionally you may have to alter your price but more often than not if you have accomplished creating value in your service you will get the price you DESERVE for your service.

Look at the closing documents on the next real estate sale you are a part of. If you are charging $249 for an inspection your service is by far the cheapest per hour than most any other fee. Who is going to be left holding the bag when there is a problem discovered? The realtor? Title Company? No, you.

If you're spending a total of 10 hours on an inspection, you are either retarded or need to get a motorized wheelchair.

[Christopher B. Thomas]

The point of this post is to create a conservative estimate of time / energy / effort required for an inspection. Its not a race to see who can do an inspection faster.

I do really love the motorized wheelchair commercial where they are at the Grand Canyon. Really sells me.

[Eric C. Van De Ven]

Originally Posted by cthomas

The point of this post is to create a conservative estimate of time / energy / effort required for an inspection. Its not a race to see who can do an inspection faster.

I do really love the motorized wheelchair commercial where they are at the Grand Canyon. Really sells me.

Spend as much time as you need to get it right.

I try to spend a grand total of 4-5 hours depending on travel time completing the inspection and report.
On average, it works out to roughly, after all expenses, 75 -100 bucks an hour, if you wanted to break it down hourly.

[Russell J. Hensel]

Great point Christopher - But its the ones who give them away that fade away only to be replaced by another company making the same mistake and the cycle will go on forever.

What many feel is a "bargain" is soon replaced with how they got duped and mislead. The sad perception is that all inspectors are the "same" as confirmed by the Real Estate Agent...they want them to go with Mr. Cheap.

But that is one thing I have learned in life....save and get the best you can get. I bought things many times only to hope to have something better. It was a waste of money. I then learned to save and work for what I REALLY wanted and not settled for.

But no matter how hard you try you cannot fix simple dumb people. But these people search and search for the cheapest and then will beatch because the inspection sucked. But when do they realize the inspection sucked? AFTER they move in.......they learn a very valuable lesson too late...and then will do the exact thing again when they go to hire a plumber....they will look for the cheapest...like I said these people will never learn.

$1000 on a quality job is better than $500 three times to get the job done right...

[Joseph Burkeson, CMI]

I like one inspection per day... I also like long lunches, playing cards in the afternoon & cocktail hour, but I have been known to perform 3 inspections in one day, go figure. I am a home inspector because it fits my lifestyle everything else is secondary.

[Kevin Hunt]

Originally Posted by jburkeson1

I like one inspection per day... I also like long lunches, playing cards in the afternoon & cocktail hour, but I have been known to perform 3 inspections in one day, go figure. I am a home inspector because it fits my lifestyle everything else is secondary.

Truer words were never spoken.

[Nick Hernandez]

$13.99, buy one get one free,

If this trade wants to survive you guys must stop the bottom feeding and base your business on QUALITY. Marketing is a necessity, but think of the stone crab fisheries, when the price gets too low, they stop pulling traps, basic supply and demand.....

[Joseph Burkeson, CMI]

Originally Posted by nhernandez1

$13.99, buy one get one free,

If this trade wants to survive you guys must stop the bottom feeding and base your business on QUALITY. Marketing is a necessity, but think of the stone crab fisheries, when the price gets too low, they stop pulling traps, basic supply and demand.....

Talk about your supply & demand. Florida has over 5,000 home inspector licenses, and full-time work for less than 3,000, if that. Marketing will only get you so far. I'm glad I'm old and have absolutely no debt.

[Russell J. Hensel]

What you fail to realize is that when you have nothing to offer over your competition then the only thing to market yourself on, is price. What else can give you an edge? It will never ever change. When one bottom feeder leaves another will take his place. I lost about 5 jobs this week to price. Sucks, but when people are bottom feeding then let them be the master of their own demise. I often think of keeping their emails and about 6 months after closing asking them how their feel about their $50 savings now....I still may do it...

[Christopher Currins]

Originally Posted by rhensel

What you fail to realize is that when you have nothing to offer over your competition then the only thing to market yourself on, is price. What else can give you an edge? It will never ever change. When one bottom feeder leaves another will take his place. I lost about 5 jobs this week to price. Sucks, but when people are bottom feeding then let them be the master of their own demise. I often think of keeping their emails and about 6 months after closing asking them how their feel about their $50 savings now....I still may do it...

The thing is it usually takes someone to actually get a "good" inspection before they realize they had a bad one.

Of course unless something just completely fails shortly after moving in.

[Glenn Fricke]

That stinks Russ. I hate that feeling when you hear the "I got a quote for $50 cheaper."

[John Shishilla]

We always tell them that we understand(the need for a better price). We will still be here if they need anything and will be happy to answer any questions they may have, even if we do not do the inspection. Guess who they would rather do business with after that?