What Estimating Construction Costs Can Teach All Business Owners

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With all businesses, wether you are selling information products or building houses there are many lessons to be had. In this article we will review the common task of giving a cost estimation.

So you just started a home based business. Your office is working properly. Your first wave of advertising has gone out. The printer’s just delivered your business cards. Unexpectedly the phone rings. Your first call! You answer nervously but professionally. The next few minutes are a blur, as you come to understand that the person on the other end of the line wants an estimate. She is asking how much it will cost to paint her bedroom. You think to yourself, “Good question.” To her, you say wildly, grasping at straws, “200 dollars.” “For everything?” she inquires. “Yes, for everything,” you say, wondering what she might have been implying. You close the deal and hang up the phone. Elated, you realize that you’ve generated your very first customer.

What is wrong with the above scenario? You named your price, it was acceptable to the customer, and a deal was made. Everything is super, right? Before becoming too eager, consider what now takes place.

You arrive at the customer’s home, on the agreed time and date. After some formalities you finally get to have a look at your new project. Just before she opens the door, your customer more or less sngs, “I would have thought this would have been way more expensive! Bless you for charging such reasonable prices.” Your jaw hits the floor as you get your first look at your new project.

The walls appear to be crumbling! You quickly decide that the crumbling material is really old paint. It will need to be sanded down completely, patched, and primed, before you can even begin to paint. Furthermore, the room is bigger than your entire house, and you quickly determinde that you are expected to paint not only the walls, but the ceiling and all of the trim as well. There are four double hung windows, each of which will require substantial work, as will the chair rail, baseboards, and four closet doors and casements. You make some quick calculations in your head and immediately realize that the price you quoted will not even pay for the amount of paint needed, not to mention all the other tools and supplies that you will need in order to do the job. You consider withdrawing your offer, but quickly realize that new businesses live or die on the power of word of mouth, and to go back on an agreed-upon bid is suicide. You take the job in hopes of being able to write off your losses, and swear to be wiser next time.

So what went wrong? How can this nightmare scenario be avoided? Fortunately, there is software available that will teach you the ropes of cost estimating, and even let you know the going rates in your area. A web search will provide you with a range of options, most priced at under $100. Another option is to join a lead generation service such as servicemagic.com. These services provide customer leads as well as a wealth of tools, including extensive cost estimators. Prices are quite reasonable, with sites generally charging an initial set-up fee plus a very small charge per accepted lead.

With the assistance of software, new business owners can avoid the pitfalls of estimating. It is also wise to avoid making quotes over the phone. Gradually, you will learn the key questions to ask in order to give a realistic ballpark figure, but even then you must stress to the customer that you will need to see the project before committing to a price.

For business owners there are many ways of keeping up to date and learning new things. One very popular learning tool right now are various instructional videos. A great place to find these is the site Ebook Maniac, particularly when you want various online business skills and strategies.