TOPIC: Pricing Structure

I have had a few inspectors talk to me about prices and that I should increase my prices.  I have been putting much thought into this and started crunching numbers. 

Here is a list of things I am trying to take into consideration:

My pay ............................ $25 / hour (Normal inspections take about 6 hours inspection time and report time.  This will decrease as I get better.)
Taxes .............................. $58 % of total
Advertisement ................... $17
Education ......................... $3 (figured from 24 hours per yr at collage rates with 300 inspections per year)
Tools ............................... $15
Vehicle ............................. $30
Insurance ......................... $10 (figured from total insurance cost with 300 inspections per year)
Office Supplies ................... $30

Total Price what I should be charging is about ....... $300


Dilemma is, I see prices here from $175 - $250 depending on experience and size of house.  There are a few exceptions of some that charge more.

Question is, how can I increase my prices to meet the current business needs and still stay competitive in price range? (Lets face it, people price shop!)

Only thing I can come up with is that I need to rethink how I have set up my pay scale (think outside the box). I would like all of your opinions on this.

I have thought about charging $150 flat rate for showing up and $25 per hour for my services. That would make it appear competitive and still meet the needs of the above prices. 

$150 flat rate
$25 / hour x 6 hours
Total $300


What are your thoughts on this?  Do you think it would work and not lose me all my business?  Do you have any other idea?

John,

Your flat fee + per hour charge may work if you can have a direct conversation with the buyer and explain what your services provide. You can advise them that the total will be around $300 (depending upon the size/age.) The thing I see with realtors, my bread and butter in addition to past client referrals, is that they just want a total $$ number to provide clients...so the flat fee may be a tough sell.

My prices are probably above the median here in Tampa. I sell my services that include prep, the inspection, the report and any consultation afterward (no limits.) It seems to work, I've had clients calling after a year with simple questions (always on call -- usually via email!) Knowing they have a resource available in you can add to your value. Find an edge that can separate you...what do you do best...how do you interact with the client...will you work on weekends...what ancillary services do you provide (i'm working on getting certified to complete Energy Audits)..do you have certifications etc that separate you. Try to stay ahead of the pack and price accordingly.

Whatever you do, don't become the cheap guy; you'll never be able to shake it. Keep your prices in line (slowly edge them up) or above your competition...describle your 'overall services' as cadillac (tough term in these times) versus your prices as modest.

Overall our prices are too low anyway. Hopefully these times will weed out those who aren't committed and, as an industry, we can get what we deserve for our work.

Regardless, continue to talk it out on boards like these. The good thing about them is, they remind us we're not alone.

Take Care.

John, I think the flat fee will be a tough sell. Although I think the per square foot pricing that I see is tough also, but it seems successful for some. I think you need to find a niche and market the living @#$%^ out of it. Marketing seems to be the way to make a OK inspector more successful than a technically far superior inspector.  Thus the fee can be worked into a great marketing strategy. Another thing that I have found first hand is where you market. I have been on about 25 inspections since October of 2008. I mentor with a licensed inspector as a State requirement. The guy I mentor with is a PE. (that is his niche) He is a marketing nightmare. He does very little to put himself out there. So I ask on my own of the clients how they found him and the vast majority say they found him through Nachi. Then when they find out he is a PE , BAM he's hired. His engineering degree is in Civil engineering having to do with waste water management. Hardly anything to do with home inspection. His fee is 350.00 for a HI, 125.00 for Radon, 90.00 for bugs. The clients are willing to pay because they found him through Nachi and he is a PE.
Those of us who do not have an Engineering degree have to market differently. I plan to have as many ancillaries as I can. This will give the impression to the client that I am not just a garden variety Home Inspector. I also have 27 yrs. in construction as a background. My plan is to work those angles and possibly inch up the pricing a bit. A couple of the RE agents that I've talked to tell me to offer coupons which I will not do. I always felt that you give a quality service for a quality price and I do not want to become the cut rate guy. I guess the hardest thing about this is like all business, getting your name out there. Once you do though, with good marketing, you can control the pricing in your own market.

Right on Drew....and you're right, NO COUPONS. In addition to residential and commercial inspections, I complete Wind Mitigation Inspections (big deal in FL) for insurance clients to reduce their homeowners insurance premium, I do draw inspections for several national firms (great filler), I hooked up with an insurance co in AZ to survey mobile home parks (tons in FL) for premises liability policies, 4 point inspections for insurance companies and will be adding energy inspections. Drew is right, do a damn good job with home inspections, find ancillary work, market yourself - best bet one on one situations - one realtor at time and it will build - and have a great personality with everyone you meet, whether as their inspector or out on the street...you'll be surprised at who needs you. In the future you'll want to be remembered as the good inspector and a great communicator -

I think you need to work on getting you time under 6 hours / inspection.

Here's what I charge in PA.

Condo / Row Home / Town Home up to 2,500 sq. ft. - $200.00
and $50.00 for each additional 500 sq. ft.

Single Family Home up to 3,000 sq. ft. - $300.00
and $30.00 for each additional 500 sq. ft.

Single System Inspection - $80.00 / System Inspected

Re-inspection on upgraded or repaired system - $65.00 / System

All inspections include the garage / car port, attached or detached, up to 1,000 sq. ft. and $30.00 for each additional 500 sq. ft.

Any additional outbuilding(s, garage(s or carport(s - $50.00 / hour to start (minimum).

Oh I know I need to get my time down!  But I still thing prices are too low!  I would like to be able to do 3 inspections a day if I could.  I think getting a lil PC and starting the report as I go will help a lot.  Also I still need to get time under my belt to speed things along.  But again, I don't think $300 is unreasonable, I just need everyone else to move their prices up!  lol

I've been in my house about 6 years and paid $225 for my home inspection.  People are still charging the same prices! 

So again, I ask the same question, how do I get my prices up to a point where I can survive and still be competitive?  I know most inspectors around here supplement their income with some kings of contract labor.  I want to use my brain, not my hands.