Hi everyone i’m new to the industry. Worked as a building contractor for 8 years prior. I’m currently working in Pennsylvania. Could I get some examples of how you set your prices and what each type of inspection is worth. Much appreciated
Well, first you need to determine your actual cost of doing business, broken down to a per inspection level… and/or a per hour rate…
Location, location, location
Use the same description of a house and call (or, have someone else) around to get prices and place yourself in the upper middle of what prices you get.
Dylan, I have a “system” founded in a combination of variables. First of all, let’s start with the size of the house. Three major groups in this category, small under 2,500 sq feet, medium going up to 4,500 sq feet and large from there on. In that order I present my price as $399, $499 and $599. I also have a Preferred Realtor Discount Coupon (10%) that I apply to all deals referred by a Realtor and I give credit to them (Purchase Agents). They love that…! They get credit for saving the actual customer a few bucks. In general I don’t let go of a deal for the price, if the house is over $1,000,000, I ask for 1% of the asking (Sell) price. That sets the BAR and If the customer complains, I asked them…”How much do you think is a fare price?” They usually come back with a reasonable amount in the 80% range. Most of the time I settle for their ‘number’. It is fair and certainly better that not booking that job that day and going home empty handed. Following the Standards of Practice (SOT) any job is going to be pretty similar in the amount of effort, energy and care dedicated to perform a good inspection and a quality report. You can add on an ‘dwelling age associated factor’ for old houses built before your choice of years, in my case is <1950 and I add an extra $100 flat. You may want to have a ‘location add on factor’ too. Any location over a 50 miles radius gets a $50 mark-up. The bottom line is to make sure you are competitive too.
You charge $10,000 for a 1mm home?
Also, there are a few other apps that you may want to check out.
At first I though that this was a type-o, until I realized that for $10,000 you are indeed taking them for a ride.
Good for you, Pedro.
I like that you make them feel they got a deal at 8K per inspection.
I stand corrected… 0.1% is more accurate…!
I disagree with that method. Nobody likes to be solicited by another inspector. We have to dodge to many bullshit calls without inspectors price shopping each other.
We agree to disagree. You shouldn’t do it then.
How do you do it, Brent?
Larry is spot on with the effort. And it’s something that’s done in all kinds of industries. Is it something that makes you feel a little shady when you do it? Maybe. But with the vast majority of inspectors utilizing a pricing structure that is based on variables (and as a result not advertising their prices)… not really anything else you can do to make sure that you aren’t the low-baller nor the overpriced one.
Before Covid-19 hit I used to attend networking events on occasion where there was usually multiple inspectors available to communicate with. I set my scale 6 years ago and have increased my price approximately 5% each year. Charging for mileage in my area is out of the question in my opinion, especially when you’re competing with the companies who buy the work.
Good luck to you, Brent.
Yeah, and it’s usually referred to as the “Dollar or Value Menu”, and has zero profit due to it’s pricing structure (matching their competitors fee). There’s a reason their ‘regular menu’ items are 600% higher on average. If you are not basing your fee’s around your true cost of doing business (NOT your competitors) plus a necessary profit margin, you will be scraping for paychecks or be out of business as most newbies are in under 3 years!!
Really interested how you consider researching your competition’s pricing to be a comparison to a ‘dollar menu’.
That being said, with having had run a multi-million dollar revenue business before… no doubt I agree with the concept of basing pricing off of associated costs. And I’ve seen the intensity!!! (and often times the abrasiveness) that you bang on that drum. But that is not at all practical, insightful, or otherwise helpful advice for someone that’s just starting out. Hell, it’s not even practical for someone that’s experienced but moving into a new market.
Again, I agree - to a degree - with the approach. But there should be a giant disclaimer there in regard to what that actually means. Given that most all inspectors aren’t going to have the revenue stream in years 1 or 2 that they would further down the line… it really isn’t a sound concept to be promoting. And that’s where I strongly disagree with what you’re saying.
I mean, applying your concept of pricing structure, and working on industry averages, then you’re literally suggesting that new inspectors charge anywhere between 4x and 40x what the competition is (and what they themselves would be charging by years 3, 4, or 5). That’s really the advice you’re giving?
I didn’t even realize that there was a prime example in this very thread. Per inspection based on 300 inspections is not at all the same as per inspection based on 30. Not at all looking to get into a pissing contest about it, but that’s a perfect example of what I meant in regard to it not being helpful advice for a new inspector.