Thread: Solution for predicting costs and profitability per trip for inspections?

Does anyone know of a simple solution for predicting costs and profitability per trip for inspections?

I'm just looking for a simple way to determine my costs and whether or not I want to accept certain jobs.

Tim Gray

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Originally Posted by Tim Gray

Does anyone know of a simple solution for predicting costs and profitability per trip for inspections? I'm just looking for a simple way to determine my costs and whether or not I want to accept certain jobs. Tim Gray

Brian Hannigan used to have "Cost of Business Sold". It was a useful tool that he had. It used to be on the site here, but I don't see it right now. Maybe contact Brian and ask.

I don't think you really need a special program to know how much you are willing to leave the office for. Like Gunnar said, Brian's program for calculating your true cost of business is fantastic. Its a must do for every inspector.

But honestly, you should have a fairly good idea how long a certain inspection is going to take, or a radon test, or other services you may provide. That will give you a dollar figure for each type of job. You also should know how far you are willing to drive for each service you provide. For instance, my radon testing prices jump up when the house is outside my normal service area. Sometimes, I tell them I'm not willing to do a radon test. I may be willing to drive over an hour for an inspection (if its enough money), but I'm not willing to make a return round trip to pick up the monitor.

There are many times I turn down business because it is too far away. I tell them that the job is outside my device area, and I would have to charge more than if it was closer. I usually refer them to a friend from my local Chapter that lives closer. Sometimes, they are willing to pay extra for me to do it, sometimes they go with the other guy.

This is pretty basic business stuff. However, I may have misunderstood your question, and the reason you are asking.

Profitability is a sliding scale. If you do 100 inspections, your fixed costs take a larger chunk of the fee. As you do more inspections per year, say 300, the fixed costs are less per inspection. You become more profitable per inspection as you do more per year.

The tricky part is knowing your expenses. Fixed cost items are easiest. Years premium of insurance, licensing fees. Variable costs you have to guess. I drive 20,000 business miles a year for the last 4 years. I am averaging about 325 inspections a year so about 61 miles average per inspection. Fed tax rate is about $.52 cents a mile or about $30 bucks per inspection. So my travel expenses are about 10K per year.

Basically Brian's Cost of Business has you work backwards to determine your inspection fee. You decide how much gross you want to make for the year. $60,000. Then add on the cost of business expenses like insurance, bookkeeping fees, license fees, ongoing education, marketing, tool depreciation, vehicle/travel costs, etc. Say $15,000. Alright gotta bill $75K. If you do one inspection a weekday, with 2 weeks vacation, that is 250 inspections. That means you need to charge at least $300 per inspection.

Then all you gotta do is book 250 inspection at $300. Or book 150 inspections at $500.

Hi Tim,

I speak at inspection conferences all over the country and developed a program called "The Cost of Business" specifically for inspectors. You plug in your numbers and it does all the calculations taking into account things like your desired income, retirement, taxes, health/disability insurance, and your expenses broken down into detail trying to find your hidden costs. It also takes into account how many homes per year you anticipate inspecting and the average time you spend on site and completing the report.

You can get the Cost of Business at: http://costofbusiness.com/

It is still priced at a discount. I need to go in and correct that get it while you can at a great price.

Another great service I promote is Relationship Marketing, Customer Appreciation and Customer retention using SendOutCards. You can get info on that at: http://www.InspectionReferral.com

Brian,

Will this allow me to plug in a dozen or so insurance inspections (possibly all at different rates) along with mileage, hourly rate, estimated time, etc. so that I can determine how profitable a trip is before I accept the assignments? And can I make adjustments after the fact?

I'm just starting out in the business and I'm in a relatively remote rural area. The challenge is determining if a particular job or group of jobs is is worth doing.

I'm be interested in learning more about your solutions. Is there a phone number for sales so I can determine whether or not your solution is a fit for my particular challenge?

Tim,
It should be very easy for you to determine if a job is worth getting out of bed for.

Determine how much time, (including driving) the job will take you.
See if the rate they are going to pay you meets the hourly rate you need to make.
If it does, take the job. If it doesn't, ask for more money, or decline the job.