What a $250 appointment really costs

You know the number on the invoice. Two hundred and fifty dollars an appointment. Twenty of them last month, five grand, paid on the first.

That is not what it cost you.

Run the math with me. Not with my figures, with yours. Pull up last month while you read this.

The ones that never sit

Twenty appointments got booked. How many did you actually sit in front of?

Some cancel the morning of. Some reschedule twice and then stop answering. Some open the door, tell you the wife is not home, and ask you to come back Saturday. If fourteen of the twenty turned into a real estimate, you are doing better than most companies I look at.

Fourteen estimates for five thousand dollars. Every estimate you gave cost $357 before you said a word about price.

The ones that never sign

Now your close rate. Say you close one in four. Three and a half jobs out of those fourteen.

Five thousand dollars divided by three and a half jobs is $1,428 a job.

The invoice still says $250. Your P&L says $1,428.

The close rate you had before you started buying

Here is the part that never shows up on anyone's dashboard.

The 25% you just used is probably not the rate you are getting on bought appointments. It is the rate you remember from referral work, when the homeowner already knew your name because his neighbor gave it to him.

A bought appointment is a different animal. You were sold an exclusive appointment, and it was exclusive: that vendor sold it to you and nobody else. Then the homeowner went and called four more companies himself, the way anybody does before spending twelve grand on their house. Exclusive to you does not mean exclusive to him.

So you walk into a kitchen where three other trucks have already parked out front. Your close rate on those does not hold at 25%. On the accounts we look at it lands closer to 18%, and the owner usually blames his salesman for it.

At 18% you close two and a half of those fourteen. Five thousand dollars, two and a half jobs, $2,000 per signed job.

Put it next to the job

Take a $9,000 bathroom at 35% gross margin. That is $3,150 of gross profit before overhead.

Two thousand of it went to buying the appointment.

You drove out, measured, wrote the estimate, followed up twice, scheduled the crew, ate the change order on the subfloor, and warrantied the work for a year. The company that made the phone ring took two thirds of the gross profit and carried none of that.

Why it gets worse, not better

Two things happen while you keep buying.

The price goes up. It goes up every year, in every market where the vendor has more contractors wanting appointments than homeowners raising their hand. The bigger appointment companies are at $345 a sat appointment today, working with contractors doing $5M to $50M. The lead marketplaces land around $333 a closed job once you run their $50 a lead through a 15% close. Those numbers move one direction.

And the call center booking your appointments gets paid when they book, not when you close. Read that again, because it explains every bad appointment you ever paid for. Their job ends at the calendar entry. Yours starts there.

Then there is the question I would ask before anything else. If that vendor shut you off tomorrow morning, how many jobs do you book next month? Not "how would you feel about it." How many jobs. For most companies buying appointments, the honest answer is whatever referrals happen to walk in, because there is no account in their name, no pixel that has been learning for two years, no profile ranking in their town, nothing that keeps producing on its own.

What the number looks like on the other side

One of our clients, Diamond Blue Group, remodels kitchens and baths in Delray Beach. Established company, showroom across from a Home Depot, work coming from referrals and walk-ins. In August they spent $2,500 on ads and signed three projects: $67,000, $33,000 and $32,000.

That is $833 of ad cost per signed job, against the $1,428 or $2,000 you just calculated. Same trade, same kind of homeowner, different side of the ledger. The campaigns run in their account, the CRM is theirs, and if they fired us on a Friday they would still own every piece of it on Monday.

I am not going to pretend that number holds for everyone in month one. It does not.

The part no ad account fixes

Owning the channel fixes the cost per job. It does not fix a phone nobody answers.

Seventy-eight percent of homeowners hire whoever gets back to them first, and the average company in this trade takes 42 hours. If an estimate request sits in an inbox from Thursday to Monday, it does not matter whose account the ad ran in. We have had a client with good volume, low cost per inquiry and almost no sales, because the owner was the setter, the estimator and the guy running the job, and the follow-up happened when he had a minute.

So we stopped leaving that part to the owner. Every inquiry gets answered and qualified by our people, the appointment gets booked and confirmed before anybody drives out, and what lands on the calendar is a homeowner who knows who is coming and why. The booking is the job, not a favor attached to the ads.

The question under the appointment math is a bigger one: when a homeowner in your town decides this month is the month, does he find you, and does somebody answer him while he is still deciding?

Run your number this week

Take last month. Appointments paid for, appointments that sat, jobs signed. Divide. Then put that number next to the gross profit on your average job.

If it comes out fine, keep buying. Plenty of companies should, and buying appointments while you build your own pipeline is not a contradiction.

If it comes out ugly, you found the thing worth fixing this quarter.

Either way you will know your real cost per signed job, which is more than most of your competitors can say.