Pricing Strategies & Coupons

August 28, 2005

Bob Kille Acuspect Home InspectionI just love the coupons that my competitors put out that have a limited time offer or some other incentive for a customer to act now. Many startup home inspection firms offer their customers special discounts if they’ll give them a try or place an order before the end of the month or year-end or whatever. An example of a call to action in the coupon might look something like:

I can only offer you this discount if you buy before March 30th. After that, it’s back to full price!

But the truth is, if the customer calls on May 5th with a nice, big easy home inspection order and wants the discounted price, nine out of ten companies will give it to them. What you don’t realize is that, by going back on your word regarding the time limit, your also training your customers/realtors to expect that your always going to sell at the lower price, and that those “limited time offers” are available any time they ask.

Oh, and what happens when you don’t give it to them? That’s right, you said the magic referral reversing charm, the charm that won’t let you pass go, the word without equal, NO.

Here’s the danger, discounting your price with gimmicks in relation to other home inspectors fee’s will put you into the perceived category of a low rate home inspector and when you finally figure out that you can’t make the home inspection business profitable at these prices, it may be to late to push the price.

Unlike the larger franchise firms that have a coupon marketing system with a huge budget to combat the perceived value to product pricing, and the budget to bleed money for an extended period of time your in a no win situation using the coupon strategy.

So if your determined to use the coupon strategy to build your business, “Mean what you say, and say what you mean”.

You just might make it.

Copyright © 2005 by Bob Kille. To read other home inspection related articles or to view home inspection software and book publications by Mr. Kille, click on this link. www.inspectorsuccess.com

Home Inspection & Profit

August 6, 2005

Bob Kille Acuspect Home InspectionI was speaking with a fellow inspector who wanted to purchase the 3D software and home inspection data libraries when the subject of pricing a home inspection came up.

Most inspectors, in order to figure out there pricing, start calling around and asking other inspectors prices on a fictional home. They do this until they’re satisfied that they know what to charge for the common shapes and sizes. This is a very dangerous strategy for pricing your services and should be avoided at all costs.

The first thing you need to figure out is can you “afford” to be a home inspector in your area. You have to do the math. Take the number of anticipated inspections per year; multiply by the average inspection fee of your competitors for gross income. Next, add up all your fixed costs and subtract it from the calculated gross. Leave 10% for business profit. Can you live on what’s left? Don’t forget any of the fixed costs. There are at least 20 fixed costs associated with the home inspection business. If you can’t think of twenty, your going to need help to calculate your total fixed costs. It’s crucial to have an accurate number here.

To figure out your total fixed costs and projected profits along with your average hourly rate, go to: www.inspectorsuccess.com and download the “PROFIT CALCULATOR”.

If your just starting out you should figure on about 100 – 150 inspections your first year. More if you’re an exceptional marketer. Your next year should produce 200 – 250 home inspections. The average home inspector inspects approximately 250 – 350 homes a year. Can you hang on long enough to get to the numbers that generate a profit after all expenses? Do you have a reserve fund that you can draw down on? At “their” average prices are you creating any equity/savings?

There are number of items that influence the prices in your particular area especially if the market is small. In particular, the one I ran up against was a local firm that did a volume business with three inspectors and kept the prices low enough to discourage others from entering the field. It worked.

I spent about 6 months trying to get into that market place with very limited success. My prices were $50 – $75.00 higher than his because my fixed costs were higher and volume was lower. To compete with him at his pricing I would have been out of business somewhere in my second year.

Out of business, without any equity to show for all the time, trouble, and expense invested in the process. Not to mention that had I stayed employed with someone else, my bank account would never have taken the $20,000 hit to get the business started. So many inspectors out there are just hanging on because they did they’re pricing based on someone elses fixed costs. Its little wonder only one out of five new inspectors make it past year five.

Without the proper pricing structure for “your” business the work will be frenzied, inadequate, underpaid, and, as a result, unfullfilling. It’s quite possible that owning your own independently operated home inspection company is not what it was cracked up to be. In short, to start your own business without the prospect of creating equity is not a good idea. Find your true fixed costs, add them to what you need to create EQUITY in the business after your second year estimated numbers. Try it, you’ll like it.

Copyright © 2005 by Bob Kille. To read other home inspection related articles or to view home inspection software and book publications by Mr. Kille, click on this link. www.inspectorsuccess.com

Home Inspection Sense

July 30, 2005

Bob Kille Acuspect Home InspectionThis seems to be my week for complaint calls. Received another one on Monday, this one involves a copper-piping leak under the slab of a home built in 2000.

My client let me know straight off on the phone call that he was a homicide detective somewhere in California. This of course was to set the tone of the conversation and his position of authority. According to his lawyer’s (yes that’s plural), the homeowners insurance policy he has will not cover the claim so he is contacting me, the home inspector of record, to get information as to my insurance.

My firsts response to this was to restate that the type of inspection that he paid for was a visual inspection of the property valid only for the day of the inspection. Further, I explained that a home inspection is in no way a home warranty and assured him that even if I had E&O insurance they would not cover a NON-VISIBLE condition, even if discovered a day after the inspection.

A few half-truths here, I had occurrence insurance at the time of this particular inspection but no longer carry it. Which means that his home is still covered by my past E&O insurance policy. I now have the minimum state coverage of a $25,000 bond. I tried this tact (no insurance) because most lawyers won’t take a contingency case unless there’s deep pockets somewhere.

That leaves the complaintant with the hourly cost of retaining legal council for a case that may not be the best. Generally, if the case isn’t over $10,000 in damages and the case is not strong most of your better legal councils will tell their clients to forget it. However, if you have insurance the lawyers will make the claim and the insurance company will settle (non visible or visible condition) before legal expenses mount up.

The cost of a legal defense even in a frivolous suit can quickly become more than the actual claim. Both sides know this and this fact is why you will always pay your deductible in almost every claim, valid or not.

This particular train of thought, why a lawyer would choose not to take a case, is the basis for my asset protection strategy (no insurance, family trust, small asset list and corporate status). This complaint will make a good case study. I’m waiting with baited breath for the next phone call relating to this home inspection complaint. Will common sense win out?

Copyright © 2005 by Bob Kille. To read other home inspection related articles or to view home inspection software and book publications by Mr. Kille, click on this link. www.inspectorsuccess.com

The “Perfects” Home Inspection

July 29, 2005

Bob Kille Acuspect Home InspectionSome things just don’t go away the way there supposed to unless you’re extra vigilant in their disposal. This post may sound familiar as today’s topic stems directly from the posts “Being Right & The Rest of the Story”

So why I’m I back posting on a supposedly finished relationship with Mr. & Mrs. Perfect? We’ll I’ll tell you, instead of slam dunking the ball when it was above the rim I let it come down to meet me for an easy lay-up. No killer instinct I guess. I think we all know how the story goes, yep, I dropped the ball.

Here comes another new office policy: never show up to a complaintants home without a waiver & release and blank check tucked in your back pocket. Strike your deal and seal it with a signature right then and there. Don’t be complacent and wait for a repair estimate or bill. Better to guesstimate and err a bit on the high side to get them to sign the wavier and accept the check. You’ll sleep better, I know.

So what happened you ask, it went something like this. It’s been a few weeks now and the “Perfects” haven’t sent me the bill for the stucco repair. That sort of lulled me into thinking that there not going to try and stick me with the unwarranted repair after all. Not so, the call came today and not only do they want way more than the agreed upon maximum ($500), but they have now added to there complaint list.

When the home was inspected it had a brand new coat of paint at the interior, its been raining lately and stains are now showing up at the window sills in the corners. They feel that a good inspector should have been able to detect the flashing problem by looking really close at the new paint. Exactly their words, I kid you not.

Next it seems that their sliding glass door makes a sound when it’s opened, apparently catching a bit on a warped track. This isn’t there only complaint about the door, no, it now seams as there is moisture between the panes. They have received an estimate from Home Depot for $1,000.00 for the complete replacement of the 30 year old sliding glass door assembly.

Rapid fire now, here comes a repair bill ($175.00) for the front door threshold that leaks. This was described and detailed in the report as a minor condition as the stain to the surrounding walls were very small (about an inch to each side) and no apparent rot was observed. They had the threshold removed because of its dirty/stained appearance and low and behold they found out there was a small amount of rot found on the bottom side of the trim and threshold. They felt that my report failed to adequately warn them about unseen rot at the stained locations (sounds like an attorney doesn’t it)

Last but not least, the stucco repair bill that I had been waiting to receive for the last 3 weeks exceeded $700.00 not the $150.00 to $250.00 that I had estimated. The increased cost was because they had the whole wall re-stuccoed and painted to make sure no one could tell the wall had been patched.

The “Perfects” suggest over the phone (speaker phone, two of them talking at the same time) that their attorney is now involved and that they are now seeking total reimbursement for the above costs known and unknown (attorney). It was extremely difficult not to lose my cool, I’m sure my voice betrayed me a bit as it went up an octave.

How did things end up? Not as bad as it could have and not as good as it should have. I explain to them as nice as I could that I didn’t owe them anything for the stucco damage (a small two foot long, six inch wide area damaged by an irrigation emmitter) as it was hidden by vegetation at the time of inspection, to which they expressly disagreed. I went on to explain to them that a home inspection is not a home warranty and that the glass was inspected at the time of inspection and was in good condition; remember this complaint was made 3 months after the inspection.

Next I tackled the door catching a bit at the track by saying that this is an older home and in my opinion for its age it was in generally acceptable condition just as the report describes. I surely didn’t owe them a brand new door was my stance. The door threshold may have only needed a bit of caulk, as 30 years of weather had not visibly rotted the surrounding frame. As to the window flashings I suggested that it was a matter between the seller and the buyer, as leakage was not disclosed in the seller’s disclosure.

After bringing them back a bit to reality, I proceeded to let them know I was still willing to work with them in the spirit of customer satisfaction, but couldn’t in good conscience buy them a new door assembly or door threshold and or make their entire 30ft exterior stucco wall appear brand new because they didn’t want ANY sign of repair.

They played their lawyer card and I played my more than generous card. We settled on $750.00, the wavier went out today certified mail. I pray that this is the last post associated with the “Perfects”.

Copyright © 2005 by Bob Kille. To read other home inspection related articles or to view home inspection software and book publications by Mr. Kille, click on this link. www.inspectorsuccess.com

Home Inspectors Don’t Have To Be Right

June 29, 2005

Bob Kille Acuspect Home InspectionCustomer compliant calls are probably everyone’s least favorite call to take. They usually start off with “you should have seen this or you missed this”. Be careful, humans have a tendency to parrot/copy the conversational tone or style of the person there talking to. Just listening to someone who is pissed off and making acqusations raises your response level and/or anxiety level.

So my day starts with one such call. Bob you should have seen that the entire wall stucco was deteriorated and falling off, I had a guy here who tells me the whole wall may need to be replaced. He says that the wood frame is most probably all rotted. Ok, ok, I did your home inspection when? Oh, about 3 and a half months ago, and just where is the location of the wall. Oh, you mean the wall that was totally covered by vines and azaleas. Yeah, that’s the one, I just had it all removed like you suggested. You do realize that my home inspection was a limited visual inspection right? We don’t want to hear any excuses, this is going to cost big bucks and your responsible, we never would have bought this house, yadda, better business bureau, yadda, state complaint, yadda, yadda. Ok, I’ll be out tomorrow at 8:00am to have a look and see what we can do for you.

Well I can say the rest of the day was shot, just thinking about the call kept my blood up. Long story short, I arrive the next morning with my best face on only to be greeted by the client with a scowl and the words, “I’ve spoken with my attorney” yadda, yadda. Well let’s just have a look shall we. The entire wall turned out to be two very small patches at two locations where irrigation emitters were placed. The paint had blistered and some of the stucco had turned to powder. Probably about a hundred to two hundred dollar repair if you paint the whole wall in the process. I suspect that the drip irrigation heads had popped off and the wall was wetted at these locations every time the system came on.

I make a practice out of making sure all parties are happy if reasonably possible. This was a no brainier; I informed my client that while there were limitations to the visual inspection, it is “possible” that it could have been discovered during the inspection. There’s no percentage in being right, I did however point out my limit of liability to the inspection fee paid, however, I went on to explain that in all cases that require less than $500 to repair that our company would take care of the invoice. This client actually thanked me for being in his opinion “the only reputable person in the transaction”.

You don’t always have to be right; the right thing to do more often than not is to “let” someone else be right. I’ll be using this example/story to show other realtors why they should use me instead of the other guy even if my prices are higher. This is the best advertising you could possibly do in a small community of realtors.

Copyright © 2005 by Bob Kille. To read other home inspection related articles or to view home inspection software and book publications by Mr. Kille, click on this link. www.inspectorsuccess.com

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