Ernie had been building his business like a man laying bricks. He believed in being methodical, and he believed in doing things right. You advertise. You return calls promptly. You give estimates. You follow-up. You get the signed contract. You do the job the right way. You get paid. You advertise some more. And so on. Ernie believed in the Wheel of Business. Get that big wheel turning and things will be just fine. Deliver a good system for a fair price and your business will grow like corn. All you have to do is keep that wheel turning.
The trouble Ernie was having, though, was that his Wheel of Business had a big bulge in it. The bulge was right at the “You give estimates” part. Ernie’s estimates, like the estimates of just about every other contractor in North America were as free as oxygen. It said so right there in his newspaper advertisement. “Free Estimates!” the ad read.
“There’s no getting around it that I can see,” Ernie told Kevin down at the supply house. “People in this town want to know up front how much the job’s gonna cost. There’s no way you can get the job without an estimate. And you can’t charge for an estimate when everyone else is doing them for free.”
Kevin nodded his head in agreement. “Yer right,” he said.
“Trouble is,” Ernie continued, “before I can give them an estimate, I gotta go through the trouble of sizing the whole job. I gotta do the heat loss calculation. I gotta size the pipes, the pumps, the valves, the radiation, the boiler. Everything! I gotta figure my prices on all the equipment. I gotta put it all down on paper. I gotta go see them again and go over the whole thing with them. And then eight out of ten customers take my design and shop my price. And there’s always gonna be guys who are cheaper than me because they don’t do the sizing like I do. They just use my design and undercut my price.”
“Yer right,” Kevin said, having heard this sad story many times.
“But there’s no getting around giving free estimates,” Ernie said. “If other guys give ‘em, I gotta give ‘em too.”
And Kevin nodded. “Yer right,” he agreed once again.
Ernie got beat again later that day. He had given a free estimate to a homeowner the week before. This one hurt Ernie more than usual because he really thought he would get this one. The homeowner had an ancient boiler that had originally run on coal. Someone had converted it to oil years ago. The oil burner had a long gray beard. The boiler was about the size of a minivan. You could see tongues of flame lapping at the ancient metal through the spaces between the sections. The homeowner told Ernie he thought it might be time for a new boiler and that he thought the new one should be the same size as the old one so that his family would have enough heat.
Ernie was very patient with this homeowner. He explained that new boilers were much smaller than old boilers. He also explained about how houses change over time. Old windows get replaced with new. Insulation gets added. The homeowner understood and was delighted when Ernie proved, by doing an accurate heat-loss calculation on the place, that the new boiler could be considerably smaller than the old boiler, and still get the job done. Ernie then went on to explain his method of piping and how he was going to control the system. The homeowner took a lot of notes while Ernie rhapsodized about what he would do once he got the job. “Whose boiler did you say you were going to use?” the homeowner asked, and Ernie repeated the name of the manufacturer. “What was that model number again?” the homeowner queried, and Ernie, now fully in the spirit of sharing what he knew with this layman, willingly gave it up.
A week later, when Ernie called the guy to follow up on his free estimate, he learned that his stinking competitor was doing the job. “He was ten percent cheaper than you were,” the homeowner said. “And when I explained your design and told him what boiler to use, he was in total agreement. Too bad your price was so high. I thought you were very smart. Goodbye.”
Ernie wanted to bang himself on the head with the telephone.
“I must be out of my mind,” Ernie concluded the next time he saw Kevin. “I’m doing all this engineering for free and then some bum who does nothing gets the job. I gotta find a way around this free-estimate thing.”
“Yer right,” Kevin said, in total agreement, but without a suggestion.
The phone rang and Kevin picked it up. Ernie walked down to the end of the counter and poured himself a cup of coffee. “Yeah, sure, but be careful. Some of those old pipes break pretty easily,” Kevin said into the phone after listening for a few minutes. “Lots can go wrong with those jobs.” Kevin listened a bit more and then said, “Just give ’em a high number and tell ‘em it will probably be less, but they gotta let you do the job the way you know it needs to be done.” He listened again, and then said, “Yeah. You bet. Good luck.”
“What was that all about?” Ernie asked.
“Oh, that was Freddy. You know Freddy, don’t you?” Ernie nodded and sipped his coffee. “Freddy’s quoting a job that’s got steam heat. The owner wants Freddy to give him an estimate on changing the steam traps and some other stuff, but he wants the number to be exact. Freddy wasn’t sure what to tell the guy. I told Freddy to give the guy a high price and, well, you heard the rest.”
Ernie felt as though he had just heard the Voice of the Prophet. “Thank you, Kevin,” he said, grabbing Kevin’s hand and pumping it up and down.
“You’re welcome,” Kevin said. “For whatever.” But Ernie was already out the door.
That afternoon, Ernie was looking at a boiler that was older than meatloaf. It was sitting in the basement of a Victorian house.
“Well,” the homeowner said, pen poised over notebook, “what do you think? What’s your estimate?” “Well, it depends on what you’re trying to achieve here,” Ernie said. “Do you want me to just replace this old boiler with one that’s the exact same size of what you’ve got here? Or are you interested in saving the maximum amount of fuel from now on, while enjoying the most comfortable home this side of heaven. I can go either way – or anywhere in between.”
“Well right now, I’m just interested in a free estimate,” the homeowner said.
“Okay,” Ernie said. “I estimate it will be somewhere between a thousand dollars and twenty thousand dollars. It all depends on what you’d like me to do.” The homeowner started to gag, but Ernie just kept laying it all out for him. “For one thousand dollars,” Ernie forged on, “I can do a complete heat loss calculation on your home, and engineer a system that will save you lots of fuel while providing unsurpassed comfort. Of course, it will cost more for me to actually install that system. Anywhere up to twenty thousand dollars, I’d say, but that’s the very high end. I’m sure the actual price will be much less than that, but there’s no way of knowing for certain unless I first do the engineering. Then, I’ll be able to tell you for sure. And as I said, your investment in the engineering will be a thousand dollars. But I’ll tell you what. I’ll deduct that thousand bucks from your total investment in your home once you give me the go-ahead to do the work. Imagine that! A one-thousand-dollar discount! Hey, you can’t lose!”
“But your competitors are willing to give me free estimates,” the homeowner sputtered.
“So am I,” Ernie cheerfully replied. “In fact, I just did. You can choose between my engineering service or my engineering-and-installation service. If you choose the latter, the engineering service will be absolutely free, and I’ll guarantee the results of my work – in writing. If you’d like only my engineering service, I’m afraid I won’t be able to guarantee the results, however. Other contractors are simply not as good as I am. And I have no control over their slipshod way of cutting corners.” And then Ernie gave the homeowner a smile you could pour on a pancake. “Like to see some references?” he asked.
“But,” the homeowner said, “I thought you were going to give me an exact price. Can’t you give me an exact price?”
“Sure!” Ernie said, “But that’s not an Estimate, that’s an Exact. Exacts aren’t free. Exacts cost a thousand dollars, but I’ll deduct the price of the Exact from the total price of the Done. As soon as I am done, that is.”
“You don’t work like other contractors,” the homeowner said.
“I know,” Ernie replied. “I’m much better! But we do still have free Estimates, You can’t be in business around here without free Estimates. We charge only for the Exacts and the Dones. That’s fair, isn’t it? Now, how about those references? Like to see ’em?”
He got the job, of course. And ever since he made this minor adjustment to his day-to-day life, Ernie’s Wheel of Business has been spinning in perfect alignment.
If you liked this story, then you'll love The Contractor Stories by Dan Holohan.