Fee or Free?

By Michael A. Gambino,
owner, operator, Gambino Lighting

Because there is intense competition from many general service trades that offer some form of outdoor lighting, it takes courage to implement a consultation fee, but imparting years of professional knowledge, direction and advice is a valuable service that warrants a fee and tells the client you’re expertise is valuable.

This question of whether or not to collect a fee for design consultation is often asked and is the point of this article. I decided five years ago to implement a nominal fee, which ranges between $60-$150, depending upon how far I must travel for all new prospect design consultation meetings. Personally and professionally it has had a huge impact on the growth of my business.

There were times before I established a consultation fee schedule that I would travel to meet what I thought were serious qualified prospects, only to discover they only had a passing interest in outdoor lighting for their home and no serious inclination to invest the kind of money it costs for one of my systems. Some had no intention of hiring me to begin with; they were do-it-yourselfers out for some free design and installation tips at my expense.

I would return home feeling rejected and upset that I had just wasted my time and burned a half a tank of gas.

 

Many do-it-yourselfers seek the advice of a design consultant, hoping to get free expertise on a project. Consultants that fall into this trap will end up feeling rejected and lose time and money.

Being a single-person operation, doing all the selling, installation and maintenance of systems myself, I realized I could no longer spend unbillable time with prospects. Furthermore, I felt it was unfair to charge my clients the extra cost that I had incurred for those whom I wasn?EUR??,,????'???t doing business with. It just made sense all the way around to collect a consultation fee at the end of the meeting and then credit it back to the client upon completion of the project.

But Prospects Won’t Pay for Estimates in My Market!

First you must overcome your preconceived beliefs or notions. They won’t pay for free estimates but they will pay for a design consultation, which has greater perceived and actual value. There is a big difference between the two (I won’t insult your intelligence by explaining it here).

Let me tell you that in my immediate service area of Southern California there is intense competition from landscapers, electricians and just about every other general service trade who offers one form of outdoor lighting or another. It took courage for me to implement a fee since prospects got such “freedom” of choice?EUR??,,????'??+the key word being “free.” Though I soon realized that since I specialize, and outdoor lighting is my only business, they did not threaten my business, as none could match the level of quality and personal follow-up service that I provided. In fact, we were serving different markets and my consultation fee only underlined this reality.

You should waive your fee for any client who has previously done business with you. If you have treated them right, you should be positioned to install their next project.

I have kept records since collecting for design consultation and the records show that a mere 15-20 percent of the inquiry calls-per-year I get from prospects are unwilling to pay my fee. I have no way of knowing for sure how many of them would have bought from me, but I believe that very few of them would if they were unwilling to pay a consultation fee for me sharing my expertise. Have I lost a few projects because of it? Maybe, but the financial and psychological costs to meet the numbers of those who wouldn?EUR??,,????'???t have bought far outweigh those that would.

A number of professional associates of mine who have decided to implement a consultation fee have told me that they would never go back to the days of dispensing valuable information for free to prospects that accord little or no value to it. In fact, they report an increase in business with “quality” clients that have brought them more referral business of the same kind. The fact is that serious prospects will pay a fee for the convenience of having you out to their home to offer a solution to their outdoor lighting needs.

If you have any doubts, implement the policy with a guarantee that if your prospect is not satisfied with the time spent with you they do not have to pay. To date I have not gotten every project for which I gave a consultation, but I?EUR??,,????'???ve never been denied my consulting fee. If you experience constant resistance to your fee then perhaps you are marketing to the wrong people and should make changes that will bring you more qualified prospects.

It Makes Sense

First of all, you are incurring expenses whether you are meeting prospects yourself or have a sales representative do it. Sophisticated upscale homeowners realize this. Many are professionals themselves and want to do business with a professional. This is the kind of clientele you want to attract, assuming you are designing and installing quality high-ticket systems. In addition, you are providing a convenient and valuable service to the serious buyer by allowing them to shop without leaving the comfort of their home. This aspect alone has great value.

You may lose some customers by charging a consultation fee, but the financial and psychological costs to meet the numbers of those who wouldn’t have bought far outweigh those that would.

People have greater value for things they pay for and you’ll be surprised how better focused and attentive they can be when they are investing their hard earned money for your time. There is a vested interest to get the best use of your time, which makes for a more productive meeting. Additionally, all the decision makers are usually present, making it easier for you to answer questions and get consent from all concerned parties and close the deal.

But My Competitors Are Giving Free Estimates

This is precisely the reason you should collect a fee. You should be doing things differently than your competition. I’m amazed how far some service providers go to land a job on total speculation. I’ve seen some draw up elaborate design plans and leave them behind without any commitment on the part of the prospect. They spend numerous hours “jockeying” lighting fixtures around the yard after dark only to leave with dog excrement on their shoes and an unsigned contract in their briefcase.

Then there are those that try the old “puppy dog close” and set up a demo kit and leave it in the prospect’s yard with the hope they will become so attached to it that they will want to have it permanently installed regardless of the cost.

I’m not knocking any of these techniques, but before investing all of this time and resource, a monetary commitment should be made first with a small deposit toward the project.

The author has kept records since collecting for design consultation and the records show that a mere 15-20 percent of the inquiry calls per year from prospects are unwilling to pay my fee.

To this day I believe I am the only one in my service area to have a consultation fee and it hasn?EUR??,,????'???t hurt my business in the least. I am busy year-round here in Southern California. Perception is reality and the perception is that you must be successful and busy if you can afford to risk losing some prospects by charging for your time. You are positioning yourself as an expert and valued advisor in the marketplace. I would be suspicious of how good someone was if they had time to meet for free with everyone who called them, especially if a competitor was charging.

If you are just starting an outdoor lighting business, you may not be very busy at first, however, you will later be perceived as the expert in your area who, instead of running all over town chasing down every lead, is compensated for his time. You will feel better about yourself; you will be motivated at all times to act professionally; you will make sure you do nothing to harm the good reputation you have earned as the professional expert in your service area. Your quality of work and second to none service after the sale should solidify your position in the marketplace.

While contactors are paid for installations such as this, they are often not compensated for design consultations, which eat up valuable time and money. The author has instituted a consulting fee between $60-$150, depending on expenses and distance traveled.

When Not to Collect a Fee

You should waive your fee for any client who has done business with you before. If you have treated them right, you should be positioned in the role of trusted advisor by now. It should be a matter of when you can do the additional work, not if. Competitors should not even be in the picture by then and a meeting should simply be a formality to discuss details and costs of the project.

Ultimately, the decision is yours. If your outdoor lighting sales are lacking this may be the kick you need to jumpstart your business. Even if you are doing well, charging a fee for your time adds to your bottom line. It has for me.

Michael Gambino owns and operates a one-man professional outdoor lighting design/installation business in Southern California. He can be reached at mike@gambinolighting.com.