Stop Offering 'Free Estimates' for Large Projects; It's More Profitable to Charge for Them

Thank you as always! This is Kaiun-san.
Looking forward to working with you again today! 😊

When someone asks you through an inquiry form, "I'd like you to do this, is the estimate free?"
how do you answer?

Most people on the service-providing side would probably answer, "Yes, estimates are free."

Regardless of the size of the project.

Various TV and radio commercials also broadcast as if it's a given that estimates are free for companies, don't they?

But just because that's the case, there is absolutely no need to copy them.

Large companies have plenty of staff and the capacity to create estimates no matter how many, and even if they lose the deal, their corporate strength remains unshaken. However, we individual business owners don't have that much spare time. That said, we can't just jump straight to a contract without an estimate.

For standard project estimates, it's perfectly fine to offer them for free, but when it comes to large-scale projects, it's a different story. Not only do you need to create an estimate, but you also need to prepare a lot of materials and the like. Some clients even require a presentation. It's quite demanding.

What do you do in such cases? Do you still desperately create a free estimate? Even when there's no certainty of closing the deal? Even when you might just be a stalking horse for a competitor?

In such cases, Kaiun-san makes it a "paid estimate"!
That is, for complex and cumbersome estimates.

Did you think, "Wait, is that okay?"

Of course, I don't loudly declare to the person requesting the estimate, "Our company charges for estimates. Please understand this" (laughs). You'd be cut off right then and there.

Since the other party is asking whether the estimate is paid or free, they clearly don't want it to be paid. That said, there's no way I'm going to let a precious inquiry slip through my fingers.

So, even though it is paid, I change the angle and appeal to them. It goes something like this.

"For large-scale projects, our company requires a plan application."
"The plan creation fee is a flat 30,000 yen, but if we close the deal, we will either deduct this 30,000 yen from the total amount or provide a cashback."

What do you think?

First, a "plan" refers to the project estimate. We accept this plan application for 30,000 yen. Then, we create the estimate, and if we successfully close the deal, we apply this 30,000 yen toward the total amount.

This way, the other party doesn't lose anything. It effectively becomes a free estimate. It's easy to understand if you think of this 30,000 yen as an advance payment or a deposit.

Of course, if the deal doesn't go through, the 30,000 yen for the plan application is not refunded, so it becomes company profit. You don't lose money even if you do the estimate.

This amount can be anything, but 20,000 to 30,000 yen is probably reasonable.

In a sense, this is a test closing. If the other party thinks, 'It's ridiculous to pay 30,000 yen upfront when I don't even know if I'm going to do it or not,' then this project will disappear.

And that is fine.
It's painful to spend days putting your heart and soul into an estimate, only for them to take one glance and say, 'I'll take this,' and end it there, isn't it?

This measure is highly effective as a deterrent for people who only want an estimate. It feels ridiculous to pay money just to get an estimate. Conversely, it is suitable for determining whether a client is seriously considering the project.

Forward-thinking clients usually close the deal. Perhaps paying in advance helps solidify their commitment to you.

Whether you make estimates free or paid is up to you, but please be careful not to end up with all the work and no reward.

Naruhiko Kaiun

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