Know Your Worth

Setting business rates for home inspection services

August 19, 2024

Establishing the right rates for your home inspection business is essential to achieving profitability and growth. Striking a balance between competitive pricing and sustainable business practices is key. Let’s dive into how to set your business rates effectively.

This is a question we have all asked ourselves in this business, new inspector or seasoned professional: “Are my inspection services priced accordingly?” Here are a few tips to consider refining your pricing structure.

Evaluate your operating costs.

Include fixed costs like office rent or even your home dedicated space, utilities, all insurances, and professional licenses fees, as well as variable costs like transportation, advertising, recurring or replacement equipment costs, and maintenance. Don’t forget to account for labor costs, including employee wages and benefits. Knowing your total expenses helps ensure your rates are sufficient to cover these costs and allow for a reasonable profit margin. I believe this is the best model for a business.

Do your market research.

Market research is crucial to understanding the competitive landscape. Investigate the rates charged by other home inspection service companies in your area.
This gives you an idea of the average rates for
home inspections in your region and helps you identify how your service stands out, such as through superior report quality or additional services offered. Don’t underestimate your experience, training, and knowledge. This research enables you to set rates that are competitive yet still offer value to your clients.

Choose the right pricing model.

Choose a pricing model that aligns with your business goals and meets your clients’ expectations. Options include a flat rate for standard inspections; you can base it on size or square footage, the age of the home, or some calculate by number of bedrooms and bathrooms—always with additional fees for other services.

A combination of above and tiered pricing with additional services or varying levels of combination services and corresponding price points can be a package deal, if you will, with easy picking, like a fast-food drive-through window.

Determine your hourly rate.

An hourly rate can be used based on the estimated time spent on each inspection. I call this the one-third, one-third, one-third model. One-third is your take, your pay for your service, one-third is for your entity, your business, and one-third goes to operating costs, or your wear and tear or replacement and upgrading of tools and equipment, gas for the vehicle, office supplies and so on. This model is easier to configure but may not be the most consistent and accurate.

Adding value to your services can enhance the appeal of your pricing and differentiate your business. Consider upgrading your software so you have comprehensive, easy-to-understand reports with clear, actionable insights for your clients. Offering additional services like radon testing, sewer scanning, energy audits, or mold inspections can also increase the perceived value of your company. Educate your clients by sharing homeowner resources and information about the inspection process, home maintenance tips, and help them make informed decisions.

Once you’ve calculated your costs, researched the market, and established your pricing model and value additions, set your rates. Make sure your rates cover your costs and provide a reasonable profit margin. Profit margins vary across the country and usually range from 20 to 40%. Always remain competitive and fair for your clients. Your rates should reflect the level of service and expertise you provide. Use your experience, training, and tool chest as your backbone to be your Unique Selling Point (USP).

Clear communication is the most important thing—vital when conveying your rates to potential clients, ensuring clients understand what’s included in your services and any additional fees they might encounter.

Regularly review and adjust your rates to maintain competitiveness and profitability. Keep an eye on changes in your costs, market conditions, and business goals, and be prepared to make adjustments as necessary.

By following these steps, you can set business rates for your home inspection service that strike the right balance between profitability and competitiveness. Stay flexible and responsive to market trends and client needs to ensure the ongoing success of your business.


To Read the Full Article

ASHI offers its members unparalleled resources to advance their careers. ASHI offers training for inspectors at all levels of knowledge and experience, including resources about all major home systems. Members benefit from a vast network of experienced professionals, providing a community for mentorship and knowledge sharing..

Learn More About Membership »

In this Issue

Client Communication Skills for Home Inspectors

As a home inspector, client communication skills aren’t a nice-to-have; they’re a need-to-have. Fail to have effective communication with customers, and you are more likely to face insurance claims.

Bridging the Gap

Today, I want to discuss the exclusive benefits of your ASHI membership. I am going to demonstrate that you can quickly get a tenfold return on your investment as a member of the oldest and most respected Society of Professional Home Inspectors.

Remembering Carl Fowler

It was with great sadness that we learned that Carl Fowler—a supporter of ASHI and the inspection industry for more than 30 years—passed away Tuesday, May 28, 2024 after a hard fought battle with cancer.

Inspecting the Roof

Regular maintenance is imperative when it comes to making sure a residential roof system is performing as it should, according to the National Roofing Contractors Association (NRCA).

Postcards from the Field

To submit your postcard, please send your name, city, state, high-resolution photos, headings and captions to: postcards@ashi.org
This field is for validation purposes and should be left unchanged.

Professional Networking

Grow your professional network, find a mentor, network with the best, and best part of the community that’s making home inspection better every day.