American Painting Contractor Magazine
They call, you come. You give, they take.
That sums up the first 10 years of my 20-some odd years of experience as a contractor in New York City giving hundreds upon hundreds of free estimates. Then in one long, hard week that all changed. The painting gods smiled down on me that week with four events that changed the way I do estimates.
It began with a trip to the dealership the day after my car’s check engine light went on. "How much will it cost?" I asked. The guy behind the counter at the car dealership smiled and said, “I have no idea until we hook it up the diagnostic machine to find out what’s wrong. After that, we will give you an estimate. The cost for the diagnostic test is $125.”
Just to figure out what's wrong? I wish I could do that; what a scam! I begrudgingly gave him my credit card and approval. I left a little upset that these guys actually charge for an estimate when I am running around New York City giving out two or three free estimates per week.
That afternoon I met an architect at a jobsite for yet another free estimate. He had prepared drawings and specifications for the repair and repainting of a highend NYC home. I enjoyed working with architects because I felt that it leveled the playing field, providing an “apples to apples” fairness in the bidding process.
This was the second event that changed my way of thinking. I knew that the architect was paid by the owner to prepare drawings and specifications providing details about the project. After reviewing his materials, I saw that it was nothing more than a detailed “scope of work” that assisted the owner in getting a good handle on the costs and reduced the owner’s exposure to the risk of costly change orders and scheduling conflicts.
Later that week the third part of my serendipity from the gods arrived. At that time I was quite busy. I had gained a reputation for being a specialist in historic preservation work. A recommendation from a local preservation society produced a call. “Hi, this is Mrs. Jones. I would like an estimate to repair and paint my house. Do you charge for estimates?”
The five magic words were spoken: “Do you charge for estimates?” I quickly thought about my dealership experience and my work with architects, and before I could catch myself, these words came out of my mouth: “Yes we do, and the cost is $125!”
“OK, ” she said. “I will have a check for you when you arrive.” It was that easy.
The next day it happened again, but this time it was not as easy as the day before. When my potential customer discovered that I was charging for estimates, he flatly said no. Thinking quickly, I just replied, “I am happy to give you a free estimate. Please forward to me a scope of work so I can give you a proper, accurate estimate.” I spent some time on the phone educating my future customer that he was at a distinct disadvantage by not having a scope of work Prepared for everyone that comes to bid on his project. I pointed out that he will get bids all over the map, and he probably doesn’t have the experience to know what needs to be done. This was gift number four.
Over the years I learned to greatly refine the process and stopped charging for “estimates.” Estimates remained free; however, I began charging for the development of a scope of work.
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Economics: Madison, the CPA, is faster than Mason, the house painter, at both accounting services and painting?
(Consider This) Madison, the CPA, is faster than Mason, the house painter, at both accounting services and painting. This means that:
A. There is no reason for them to trade services.
B. Madison should trade her accounting services for Mason's painting services, so long as Madison is relatively more efficient at accounting services.
C. Madison should trade her accounting services for Mason's painting services, so long as Madison is relatively more efficient at painting.
D. Madison has the comparative advantage in both services.
The answer should be "B",
Although Madison is better at both task (has absolute advantage in both), chances are she is much more efficient at accounting then she is at painting. Thus, because she would be more efficient, she has comparative advantage in accounting (in addition to absolute advantage in both) and Mason would have comparative advantage in Painting (even though he is a slower painter then Madison)