Can Your Estimate Cost You Credibility?

Today’s marketing tip isn’t so much a marketing tip as it is a suggestion, in story format. As you may know, part of what I do is make follow-up phone calls for some of my bigger contractors on the sits they go out on that don’t close. I do this to ask consumers for their feedback as to why they opted not to choose my client.

And you will be amazed at the answers

Everything from “the guy smelled like smoke” to “the price was too high” are answers I hear all the time. But on this one particular call, Mr. Jones really set me back on my heels.

My client is a kitchen and bath remodeler who does great work at fair prices. But his take-rate has been pretty low for the last couple of months so I suggested we find out right from the horse’s mouth why people were opting to go somewhere else.

After about 40 minutes of phone calls I got a hold of Mr. Jones. After going through a series of questions with Mr. Jones, I finally got down to the estimate and price. I asked Mr. Jones if he thought the price was fair and reasonable.

He said he had no idea

I asked him to qualify what he meant. He proceeded to tell me that he was an accountant by training, and works with numbers all day. He also told me that statistically speaking, it was almost impossible for his estimate to be submitted to him in round numbers.

$22,000

That’s what Mr. Jones’ estimate was for a new kitchen, so I asked him what his problem was. Again he reiterated that it was highly unlikely that his estimate would come out to $22,000 even. So he wasn’t sure if my client added the bill upwards or downwards, and if so, by how much. $500, $1000, $5000?

You see, round numbers are always fake

I forget where I read that, but as soon as I had this conversation with Mr. Jones it was like a flashing sign in the back of my head.

Now, this may seem like a minor detail to you, and maybe it is, but it wasn’t to Mr. Jones. And as you know, people will come up with hundreds of different reasons not to do business with you. It may even seem silly, but I know contractors who issued their first invoice with invoice #367 to give the impression that they didn’t just start their businesses.

I went back to my client and mentioned to him the issue that Mr. Jones had. I asked him to pull the last three months worth of estimates so we can review them together. Lo and behold almost 2/3 of these estimates ended in round numbers. When I asked my client about the statistical anomaly, he claims that he did it to make it easier for the homeowner. He said he only rounded up to the nearest hundred dollars and made mention of it to most of his prospects.

Now, I don’t know if this is the cause for slowing sales or not. But if it affected one person, there’s a good chance it had some kind of an impact on others as well. Or maybe Mr. Jones was hypersensitive to the round numbers because of his occupation? I will tell you this, as I look at the number of 22,000 in the middle of page it does strike me as odd to look at. There is something not right about it. What do you think?

 

By Darren

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26 comments on “Can Your Estimate Cost You Credibility?”

Good point Darren,

I’ve seen mention of this quite a few times, one study I read went one step further & said that the most believable numbers were odd numbers and of those, the strongest positiv reaction came from 7 & 9, I believe.
Since I read that study I’ve always rounded to the closest 7 or 9 & it seems to work quite well as I run about a 75% conversion rate, even with a markup of just under 100%.

Great observation ! I’v been doing that for the last 30 yrs. The customer assumes that great detail went into estimate if odd number used. Look at the window prices on trucks.

I guess I could see where this would be an issue with many especially with an even number on the thousands. I don’t do that, but do round up cents.

Seven is a good number I agree.

been doingb that for years .make sit look like you really put your numbers together ,I got a job once by 1.12 if i rounded I probally would not have got it

As a Professional Civil Engineer and owner’s representative, I am very leary of proposals received that are round (up or down) unless I’ve done business with this group before and am aware of it. I agree with the other comments that it appears as if the bidder has not put much effort into their proposal.

Although I am a small co., doing only a few decks a year as a general remodeler, I have found that rounding prices one way or another hasn’t been a problem. The relationship that is developed during an initial interview I feel is the most important. An honestly informed potential client doesn’t seem to be concerned with round numbers or not.

Thanks Ed for stopping by. I am happy to see it hasn’t been a cause for concern for your business.

Interesting – as architects with only my wife and myself performing the labor, we have rounded to the nearest $100 that we ‘feel’ would make us ‘happy’ to do the job. We would feel silly presenting a quote ending with something like $…57.00 — maybe proposals rounded to the nearest $100 are turning some folks away.

Our estimates are in print. We have a price list for general purposes. We find this helps be up front on things. We have never come across a competitor doing the same thing. that seems to be a bigger deal.

I never leave something just by the even thousands like that, I will round up a few dollars here and there but never an even 22,000. A lot of clients work in big numbers for the budget like I don’t want to spend more than 40,000 on my kitchen remodel but they see 39,545.00 and they say that’s ok, if it was 40,200.00 they might say no. I never put cents into the proposal and usually end with a 5 or a 7. Whole numbers definitely look like you are throwing together rough numbers without much thought into them.

Good topic!
Dan

Hey Dan,

I ask because ending pricing in “7” has always been an internet thing, so I wanted to see where you heard about it. Thanks for doubling back.

The thought of how the customer perceives an estimate or proposal has never crossed my mind before. Even our materials cost is rounded on our estimates, although it clearly states on our estimates that the pricing is rounded to the nearest $5. Our proposals are much bulkier then our estimates and our supplies and materials section is broken down quite well. We have been told our proposals are very detailed and have at times ensured a win over other bidders.

We always try to focus and connect with the client during out first meeting, focusing on their final picture of their project and educating the customer as to issues, our processes, etc. This is more of an attempt to relieve the client’s anxiety and our chance to show that we are there with the client before, during, and after the project.

I can see the logic behind how this could improve conversion rates. After all companies like Walmart, Sobeys, SuprValue are all using this logic to some degree in the advertising both in print and in store. Gong to try this on our estimates and see how it works out and if it improved our conversion rates.

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