Raising Fees

Hi, as a fairly new inspector I have been to a few meetings where Nick has opening pushed the raising of the home inspection fee that is charged. This is not a new subject and I have been hearing this since I got into the business.

I agree with him that this needs to be accomplished but the how is the question that I have. I will be the first to admit that my fee in my opinion is to low to be sustainable for the business 339$ up to 2000Sqr feet. I have been shown that a fee for services needs to reflect the service quality and reflect the benefits to the buyer/seller in the transaction as well as take into account the risks involved. Look at the comm fee for agents. 2-4 % ours is like .1%. So I would like every ones opinion.

I come from a industry where everyone has to charge the same amount for the service/product its mandated by the supplier, this so that everyone makes a set fee and its then all about services so if 1 raises a fee every one gets the benefit.

I will also broach a subject that I know will start a fire storm but thats what makes our world wonderful. How about a national convention and at that time we discuss a NACHI fee structure. Please, I know it might be taboo and what about the Competetition (ASHI, OAHI, CAHPI) who cares we have no real competion but ourselves. And a set fee structure would benfite all as long as its reasonble. My bet if this every happened it would be in the range of 500-700$. This way you will not loose business to the cheaper guy. Also I believe that the rest of the inspectors who belonged to the other *** would follow our lead just like gas stations.

The last thing I want to say is that I know there are guys out there charging 250$ and to those I say “Are you Nuts!”

Steven :mrgreen:

Stephen - you will find fess vary significantly with region.

I have tried both methods, and - by far - the best method for me at start up was to price yself competitively at the lower tier of the market. The phone rang more, more jobs were booked, and more income was generated. This lead to more clients, who could refer me to more future clients, which lead to more business, etc.

I am not one that would subscribe to any association interfereing with my ability to position and market myself.

I have been quite successful for going on 3 full years now, and have expanded to hire other inspectors. I see no need to alter my fee structure until expenses or other financial reasons would dictate that it is prudent.

Like I said, I have tried both methods and have found that top quality service at reasonalbe prices is a formula that the buying public seems to like - hence my growth and expansion.

Contrary to opposition viewpoints, the buying public does not equate quality with price when it comes to inspections. Many of the higher priced inspectors, naturally, try to sell that point, but it is just as easy to counter that their inflated prices do not buy you any more expertise or service. In fact - they often buy you less (guys who adhere rigidly to the SOP, for example).

There are certainly other methods, but my pricing strategy helped me take off after 3 months of marketing the nick overprice strategy did not. So, there are also legitimate and successsful alternatives.

I am more than satisfied with my pricing and wish you luck with yours.

Very good point Joe !

Thanx. I disagree on this point. At every stage in the public eye people equate quality with price. If I tried to sell you a BWM @ $50,000 you could say yes, german engineering good quailty vehical. Good price. Why should that same perception not apply to a service. I believe that its because we as a whole do not properly market our service and “educate” the clients and agents on the “value” that is being transfered.

Sales and Marketing 101 - Convert Features to benefits. People do not buy features they buy and invest in benefits. You can’t sell a feature of a business. I.e. “During my inspection I examine the roof covering and also look in the Attic” this is a feature of the service. Most people don’t understand why and we have to give them the benefit.

Home Inspectors market the price for and inspection as a “cost” instead of an “investment”. Once you ediucate and show them all the benefits of an insepection the price is small part of the deal. They will wonder why the investment is so low and the return is high. Thats why I think fees need to be higher. To that end I still have to deal with the guy down the road charging 275 and only making 150 after to factor in the Gas, Insurance, Report Book, Marketing costs, Car payments, Equipment, office expenses. and then they wonder why at the end of the day Macdonalds looks better.

We also have to remeber that the SOP is a minimum and that the more you do for a client (within reason) the better off the client and the more work should come your way. Those guys who have memorized the SOP and stay
strickly within it are those who may be losing business because someone else goes beyond and then the legal aspect. I don’t know how it is in the US. But here if every inspector walks the roof and I don’t then even the SOP will not really protect me from a law suit.


Lawyer recently taught me that more is not better!
I agree with your theory, however it does not entail going outside the scope of SOP to a point where you placed yourself in jeopardy. You can provide more for your client without going outside of the SOP by providing further education, a better inspection report, more personal service.

The use of ancillary services to raise your company above others also raises your liability. In my opinion, if you’re liability increases your fees should also.
Don’t get me wrong, I am not one of those “stick by the SOP at all cost”. I got into a home inspection business by offering a service that was totally outside of the home inspection per view, but it was needed by the local populace. Basically, providing a better service for the services we perform its the way to set yourself apart from the competition.

As for having to do what everybody else does, that’s BS! Maybe some lawyers get away with it because they can throw a pile of horse manure in the air and it will cost you $10,000 regardless of how it hits the ground. They have no basis for claims they make and still make a generous living for themselves! If the SOP or state law says that you will perform your business in a certain way, regardless of how everyone else does it, that is protection for you. However, as pointed out by my lawyer, when it says in 10 different locations that home inspection does not cover structural engineering, if you accidentally use the word “structural” in any context in your report it can all be thrown out the window. So don’t say one thing and do another or you’re putting your neck on the chopping block.

The subject of this thread is increasing prices. As pointed out, somebody pays a lot of money for real estate agent services. According to real estate professionals, this fee is not based upon the one-time sale or listing but is based upon the amount of work one must do to achieve one commission. The amount of liability a home inspector must carryto give a house a clean bill of health for the client is enormous. Eventually you’ll all come to realize this when you get involved with litigation. It’s not about what you did, or said, or wrote, it’s about what your client and their attorney thinks you are supposed to do. It’s not about being right or wrong. In a civil lawsuit it’s all about “settlement”. It doesn’t matter who is right or wrong it’s how much you’re going to pay in the mind game of litigation.

If you are not preparing for the upcoming litigation of your business, you won’t be in business any longer when it does come.

You are indeed from the Ncik school of thought. As a practical application it is not effective. You can sell boutique pricing to some, but not to all, and the market for boutique pricing is limited to those impressed by status or who have not come to the realizaton that quality is available at a variety of price points.

So, to use your example, if you offered me the BMW at 50K, I would say “why not buy a VW for $25K?” Same German engineering, severes the exact same function of getting me from A to B with equal efficiency and performance, and I am not overcharged for some mythical “benefit” advertised by BMW.

In addition, the inherent flaw in the arguement is the assumption that people are willing to pay more for an inspection. Inspections are not similar to luxury vehicles, and inspectors are not similar to professionals (doctors, lawyers, etc) who went through several long years of difficult and expensive professional training. Inspectors are most similar to tradespeople, or perhaps appraisers, and expectation for prices for inspections are set with that as a background.

No one is about to hire the $700 per hour plumber because, after all, he must be the best - he charges so much more!

In home inspections, and in many areas of the market place, people price shop. Those that do comprise a HUGE secton of the market place. They are all potential clients with a single motivating factor that has been pre-identified. These are clients that those who use the boutique pricing approach will not get.

Their sheer numbers allow you to bring the cost of business WAY down on a per inspection basis, and allow you to set prices aggressively on the lower end of the spectrum. Then, because of the volume approach, they provide a larger army or potential referral sources, which begets even more business.

This is not just a theory - this is how I built my business, and expanded to the point of hiring additional inspectors within my first 2 years. Incidentally, I do educate my clients on the value of my services. I tell them my qualifications, background and experience, I describe for them the level of care and attention to detail they can expect to recieve, and I inform them that they need not overpay for a thorough and comprehensive inspection. They are already aware of the importance of the inspection, that is why they called in the first place - they want to know why to hire ME, and value (or excellent quality at a reasonable price) is a key selling point.

I would rather work as much as possible for a few years, so that I can run the business by remote or sell it. Those with the boutique approach want to work less - good for them! I will take all the clients they opt not to take…all so that in 5 years, or 10 years, or whenever suits me, I can step away and retire comfortably.

Like I said, there are many strategies and alternatives that can prove successful. The nick overprice method failed for me, where the strategy as laid out above has suceeded. You may get different results, and I wish you luck.

If an inspector feels the need to keep pricing at the lower end of the scale in order to generate business, you must improve your marketing skills or you’ll never last. Price your services in the mid range for your market and then work hard to increase prices gradually over a period of time.

Thanks, Erol, but I have been so busy, I expanded and am in the process of spinning off 2 new companies this year. Much of that has to do with great marketing and a good pricing strategy.

It got me up and running over 2 1/2 years ago, but then became such a good business generation tool I would be crazy to abandon it!

I will not be raising prices anytime soon.:slight_smile:

Not you Joe. You have a well planned strategy. :cool:

But look at what we do for the price. An appraiser spends about 20-30 minutes at a 2500 sq.ft home then prepares a report which takes perhaps 1 1/2 hours. $300…next. :smiley:

Joe M:

We are so very underpriced as an industry it is difficult for me to understand why you would call it the “Nick’s overpricing method.”

My overpricing doesn’t even get us up to the level of fair pricing IMHO.

Joe M: My brother is near your market. Here is his fee schedule: http://www.s135577378.onlinehome.us/3.html

I agree with you, Erol. IMO, whether we are willing to publicly admit it or not, we all charge exactly what we know we are worth to our client.

Not too many people will intentionally employ a “marketing strategy” that will bring him less money for an inspection than what he feels he could have gotten any other way.

That’s one fast appraiser. They must be very good…

I refer to it as such, since it seems to me that you advocate that newer inspectors set prices at the top of the local pricing structure. That would be artificially overpricing their newbie services relative to what the local market will bear for more seasoned inspectors. Hence, the term “overpricing”.

Erol, I see your point relative to appraisers, but I believe they have a long period of apprenticeship, too (somewhere I think I read 2 years). That’s a lot of time to put in before you can cash in on your own, if you ask me.

He is indeed, and he has raised his prices twice and changed his pricing structure a few times over the last year or two. Not 2 months ago, I think, he was $365 for a home up to 3000 SF. By local standards, that is not overpricing - I charge $399 for a 2999 SF home, and many here are more than that.

He used to have a flat, “one price fits all” approach - but I notice he has abandoned that for the larger properties - probably wise since I would guess at least some Realtors were giving him the monstorously big places, but farming out the smaller homes to ower priced guys.

The digital video used to be included for free, I believe as well.

Nice presentation, and they are nice guys, I hear (never met them).

I constantly update my info on the local market so I can monitor my place within the marketplace - so I check in on them (as well as a few others I know have ben around for some time) periodically.

James, the strategy is about what percentage of the market place you wish to capture at what price points.

Yes, I can increase prices $30 and still be pretty competitive, while making the same weekly income and performing one less inspection for every 10 performed. But that one to two less clients per week, means 52-104 less chances for a referral each year (or 104-208 counting realtors, or 208-416 counting sellers and their agents). That is a HUGE hit to business considering that nearly 25% of my business is from previous client referrals.

If I raise prices $50, it is less likely that I will maintain the same income level as I would need to produce the same amount of inspections, less 1 for every 6 inspections performed, but I would likely book them at a far lower rate since I will have now priced myself out of the price shopper market. So, I would market differently and more aggressively to higher end clients (a much smaller pool of potential clients) all the while, shrinking further the pool for future referrals.

I understand other models work. But they did not work for me, and I offer my experience as an alternative to those whose experience with a higher price strategy matches mine.

Good point Joe about appraisal apprenticeship requirements. Now you have to starve for two years first. :neutral:

On site time was always a breeze. Room dimensions, lot dimensions, note any very obvious problems that would have an impact on value then a few outside photos. The report process at that time was a nightmare. No software to search for comparable sales. Big, dirty manuals to search through - sometimes for hours. This was me circa 1989…:roll:

I’m assuming today’s appraiser spends about the same time on site and perhaps an hour or two on the report. That’s about 15-20 jobs per week for a good, efficient appraiser.

Well, its easy to see you motovation. Nick as you say “over priced method”
is not flawed, as I said if most inspectors embraced it. You want to be competative in a market and I understand your points but still disagree. We here are talking more about economics of the situation and less about marketing strategy. If you think your service has value then you need to price according to that value not according to the competition.

Let me refer back to one of my favorite people (Mike Holmes), Good contractors are busy and they charge a good buck for there services because the quailty is there. Good home inspectors are busy and should
also charge a fair value. As nick says we are underpriced in comparison to others involved in the industry. Agents, Apprasiers, Contractors. all dollar per hour get more than we do for our services that can save a consumer thousands, yet we get the bottom of the barrel when it comes to fees in comparison.

You stated that you would not let an association interfer with your ability to market yourself. Yet you want me to let you do that. Becuase your pricing strategy will effect my ability to market myself and set what I feel my service is worth. I will have to spend more time and money to explain why I charge more and in reality should not have to if the service is the same as yours.

I am not greedy when it comes to money and I see many companies charging big dollars for there services because the service has value. I know I will not convice people to raise there prices on there own but most will follow suit if somone else does. So if you see your comptetion raising prices you are probably going to do one of two things.

  1. Leave your prices the same in hopes that you will take business away from the competetion. 2. Raise your prices so that you can retire faster.


OK - we simply have a fundamental disagreement over the issue.

To me, pricing does not occur in a vacuum. Few people in the world get paid what they are actually “worth”. Entertainers and athletes make a fortune whie teachers do not. Is it just? No. It is established by what the market will bear, just as our prices are.

I don’t begrudge anyone charging more - I just choose not to as it has worked brilliantly for me. You can charge $1000 per inspection or 3% of sale price, if you feel your service is worth it.

I am offering (as I often do) an alternative pricing strategy for newer inspectors since I found one that was successful, where the overcharging strategy was a failure for me.

Joe, thats what make it a great forum for this. BTW, we also live in different countries which affect peoples perceptions and what drives there decisions.