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Pricing plan?


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Starting a new business and I'd like some opinions on my pricing plan. First, I have gotten prices from several inspectors in the area, at least those that post them on their web pages. Here is a sample of the list I have for 2000 square feet....

$295 $294 $290 $275 $220

As you can see, most inspectors are in the same range with one drastically undercutting. I know from experience as well that people don't like price increases. So the price I set today I'll be stuck with for quite a while. So this is what I though I might do.

For 2000 ft, my price would be $290. But to start up I am making a one sheet, no fold double sided pamphlet. Side one has the company info, and side two has a coupon for $30. The coupon lowers my price at the start to attract more clients at the start. Then as the coupons are used up, my price doesn't change but I standardize my price with everyone else and can rely more on reputation than low cost.

Of course the $290 price is just for 2000 ft, the prices do scale by size.

Important note - I'm not Bill Gates, but I can sit on my sofa for the next year with my family maintaining it's, IMHO, comfortable life style.

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Originally posted by sepefrio

Starting a new business and I'd like some opinions on my pricing plan. First, I have gotten prices from several inspectors in the area, at least those that post them on their web pages. Here is a sample of the list I have for 2000 square feet....

$295 $294 $290 $275 $220

As you can see, most inspectors are in the same range with one drastically undercutting. I know from experience as well that people don't like price increases. So the price I set today I'll be stuck with for quite a while. So this is what I though I might do.

For 2000 ft, my price would be $290. But to start up I am making a one sheet, no fold double sided pamphlet. Side one has the company info, and side two has a coupon for $30. The coupon lowers my price at the start to attract more clients at the start. Then as the coupons are used up, my price doesn't change but I standardize my price with everyone else and can rely more on reputation than low cost.

Of course the $290 price is just for 2000 ft, the prices do scale by size.

Important note - I'm not Bill Gates, but I can sit on my sofa for the next year with my family maintaining it's, IMHO, comfortable life style.

My advice: charge $400 for that 2,000 ft house. Tell people that those other inspectors aren't in the same class as you are. Tell them that you'll spend twice as much time as the other guys will and that your fee is actually a much better value than those cheap johnnys.

It's going to be a slow start anyway. Why not start from a superior position?

- Jim Katen, Oregon

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Actually another point. I intend to offer free item specific re-inspections. In other words, the roof was messed up, they had it repaired, I'll check the work on the roof only. I will also add a stipulation that the re-inspect must take less than 1 hour. I see most people charge for a re-inspect.

I want my clients to be comfortable and have a good feeling. Not just write a check and wonder.

And yes, I hope to earn work through quality, not quantity. So maybe a bit higher price is not a bad idea.

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Originally posted by sepefrio

Actually another point. I intend to offer free item specific re-inspections. In other words, the roof was messed up, they had it repaired, I'll check the work on the roof only. I will also add a stipulation that the re-inspect must take less than 1 hour. I see most people charge for a re-inspect.

I want my clients to be comfortable and have a good feeling. Not just write a check and wonder.

And yes, I hope to earn work through quality, not quantity. So maybe a bit higher price is not a bad idea.

People don't respect free stuff. Don't tell them that you'll do it for free, tell them that the initial fee includes 1 hour's worth of reinspection time.

If you do this, expect every single customer to call you to do a reinspection of every loose doorknob and broken window. This will be an educational experience for you, though, since you'll soon learn that every repair that sellers do is screwed up.

- Jim Katen, Oregon

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Originally posted by Jim Katen

People don't respect free stuff. Don't tell them that you'll do it for free, tell them that the initial fee includes 1 hour's worth of reinspection time.

- Jim Katen, Oregon

Excellent point. Giving away anything free has a snowball effect.

As a contractor, any attempt to give something away always led to folks wanting more and more free things. As an inspector, it undermines your attempts to look, and be, professional.

I do all sorts of things that are "free", but they're calculated. I always tell folks that they can call me @ the office to discuss the report @ no charge, now or a year from now; folks really appreciate that. A well written report almost always guarantees no calls, and even if they do call, I'm in my office, it's easy, and it's a great way to sell yourself as a resource.

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Originally posted by kurt

Originally posted by Jim Katen

People don't respect free stuff. Don't tell them that you'll do it for free, tell them that the initial fee includes 1 hour's worth of reinspection time.

- Jim Katen, Oregon

This site is saving me money and head aches every minute, I love it. Excellent point and and notes taken, Thanks.

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The mistake I made is jumping on the pricing bandwagon with every one else just to be "competitive". Oops.

You really need to calculate how much you need to make your life profitable.

Get that Cost of Doing Business worksheet put out by Brian Hannigan. Last I knew, it was $25 or so. It makes you be honest about factoring everything when deciding what to charge.

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Originally posted by sepefrio

Hrmm, I searched the forums and found more quotes of about $25. But when I went to the web page, it asked for $99. Is this a new and improved version or am I just going to the wrong place?

http://www.hanntech.com/expenses/COBFrameset-2.html

It's been that price for years. It's cheap. Go for it.

- Jim Katen, Oregon

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FWIW, my inspecting life got a lot better when I priced myself out of the POS-house market. I worked easier, smarter and cleaner, had better customers and made significantly more money.

I think if an HI wants to charge decent rates, he needs to start that way. If one goes into business as the $200 guy, he'll always be the $200 guy.

Inspecting cheap and often is the short road to burnout.

WJ

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Walter hits the nail on the head. You charge cheap rates you get cheap customers and end up inspecting basket case houses carrying a huge liability. I just ran through a cost of doing buisness and determined that I can not even step out the door for less than $200. And that does not even cover paying myself a salary or having the company make a profit. Charge what you are worth and let the other guy slog it out in those muddy crawlspaces.

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Consider the impossible. Imagine you are going have the knowledge, skill and experience of a W.J., Jim K., Hausdok, Kurt M. or a Chad Fabry in five years. In your area what does an HI with those qualifications charge? Push yourself to charge what they charge and commit yourself to being one of the best.

It is absolutely true. If you start out low, you'll never be able to get your prices up to those no matter how good you get. I should know, I made that mistake.

Chris, Oregon

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