And unfortunately, there’s no simple answer. While the national average price of a home inspection is $337, it’s no simple matter of slapping that number onto your quote sheets. Home inspectors charge varying rates depending on their experience, the services they offer, the market they’re in, and even the kind of property they’re inspecting.
Unfortunately, it’s all too common for home inspectors (new and experienced alike) to undervalue their services. But the service you provide is extremely important — since most people wouldn’t buy a house without getting an inspection first — and as a self-employed professional, you need to value your services accordingly.
That’s why in this article, we’ll show you how to change your mindset around pricing your services and give you a few tips on how to charge what you’re worth.
When deciding what to charge for home inspections, don’t think small
Many home inspectors — especially new ones — make the mistake of thinking too small when it comes to pricing their services. They charge the bare minimum because they’re afraid of scaring away customers by charging too much. Or, they may be desperate to pay their business’s startup costs and want to work for cheap just to make ends meet.
Don’t fall into the trap of setting lower prices than others in your area in order to be “competitive.” You might accumulate clients who care only about low prices — and pretty soon, you’ll have a reputation for being the “cheap” home inspector.
The longer you let yourself think small and charge lower prices, the harder it can be to change your lane and charge what you’re worth.
When you start a business, you need to account for all the extra costs of running a company — including planning for your costs to increase as you grow. Otherwise, your take-home pay will be disappointing at best.
When you price your services, you need to take all the costs of doing business into consideration. Make a list of everything you need, including what you expect to need in the future as your business expands.
Your list might look something like this:
- Vehicle (including upkeep and maintenance)
- Various inspection tools (camera, multi-tool, safety glasses, electrical tester, moisture meter, drone, carbon monoxide detector, infrared camera, etc.)
- Uniform/branded T-shirts
- Inspection software subscription
- Professional website, hosting, and email
- Office supplies (including a computer and phone)
- Marketing (ads, gifts for real estate offices, branded promotional items, business cards, etc.)
- General Liability and Errors and Omissions (E&O) Insurance for your home inspection company
- Association dues (local professional chapters, InterNACHI, ASHI, etc.)
- State and federal taxes
These kinds of expenses are all part of the cost of running a successful home inspection business. Make sure that you can afford all of your business costs and still pay yourself a living wage afterwards. If not, it’s definitely time to raise your rates.
How to change your mindset
Before you make any big changes to your pricing policies, take a look at your frame of mind. Many new entrepreneurs struggle to adjust to the mindset of a business owner; they’re stuck in the attitude of an employee working for a paycheck. When this is the case, you see your clients as your bosses, and you’re just happy they’re doing you the favor of hiring you.
But to get in the right mindset, remind yourself that you are a professional. Your clients aren’t doing you a favor by hiring you; you’re offering them a valuable service that is worth the money you’re charging.
And think about it this way: if your price is too low, people will wonder why you aren’t charging more. Perhaps, they’ll reason, your service isn’t as good as others in your field.
If you price your services cheaply, you’ll just attract people who want a great deal — but there are people out there who are willing to pay good prices for quality services. Focus on promoting your business to attract those people.
Remember (and remind potential clients) that even the priciest home inspection is going to save them money if there’s a lurking issue in the home. Some home repair costs might run into the thousands. In fact, a home inspection saves the average home buyer $14,000 on their home purchase. Even if your client is paying $600 for a home inspection, that may be the best $600 they ever spend.
How to price your home inspection services
Now that you know the dangers of underselling and that you’re worth charging a higher price, it’s time to talk logistics. How do you come up with a reasonable number that isn’t too low or too high?
It’s all about doing local market research, taking stock of your goals, and finding a balance between the two.
1. Use the average cost of home inspections in your area as a starting point
A good rule of thumb is to start by pricing your inspections slightly higher than the average for your area. Start by taking a market survey with one or more of the following tactics:
- Check local inspectors’ websites for prices
- Call local inspection companies and ask for their rates
- Join a local chapter of a home inspector association and ask members what they’re charging
- Use the InterNACHI fee calculator to see the average price for inspections in your area
Plug the information you’ve gathered into a spreadsheet and calculate the estimated average cost for a home inspection in your neck of the woods. Let’s say it’s $350 for an average single family house — so you’ll know not to go below that number if you can help it.
2. Determine the ideal price to meet your goals
Once you have a solid idea of the average price in your area, take a look at your own goals to reverse-engineer your target price.
How much do you eventually want to earn in take-home pay per year? Figure out how much the annual cost of running your business is. The sum of those two numbers is your goal gross revenue.
Then, think about your time commitment. How many inspections are you willing or able to perform, on average, per week? Don’t forget to take holidays, vacation, and slow seasons into account in your estimate.
Let’s say you can do 12 inspections per week on average. Divide your goal gross revenue by 52 weeks, divided by 12 inspections per week. The result is your target price.
3. Find a happy middle ground — then gradually increase your prices
Now, you need to decide where to start setting your prices. It’s a balancing act; you have your end goal, but you also need to keep the average cost of a home inspection in your area in mind.
For example, if almost everyone else is charging around $300, it’ll be difficult (but not impossible) to find clients willing to pay $200 more. It’s best to start at or slightly above the average, then increase your prices gradually as your experience and reputation grow.
And remember: don’t make a big deal about it or apologize when you raise your prices; just quote your new price with confidence — because after all, your service is worth it.
4. Consider offering varying rates
While it may be doable to charge a flat fee for every inspection, most inspectors use a rate range that depends on a few factors. You may want to consider starting with a base rate.
Then, you might charge on a sliding scale for larger and older-than-average homes. For instance, you could:
- Charge per additional square foot over a certain number
- Charge an additional amount for every year a property was built prior to a certain date
Also, you might consider charging a little more during busy seasons. In times of greater demand, you’ll be busier and your time will come at a premium. Since most inspectors in your area will also be busy, it’ll be harder to find one who is available at your client’s preferred time — which means the client may be willing to pay a higher price.
Takeaway: Be worth the money
As you can see, the question of what a home inspector should charge never has a cut-and-dried answer. There is no industry standard; even the average cost of a home inspection will vary from location to location.
Many new home inspectors fall into the trap of undercharging for their services because they’re afraid of scaring away clients, or because they haven’t taken the long-term costs of running a successful business into account.
To know what to charge for your services, you first need to approach your business with confidence and an entrepreneurial mindset. Then, find a healthy middle ground between the average price for home inspections in your area and a price that will help you reach your professional goals.
And in the end, the secret to attracting clients while charging higher prices is to make sure your home inspection services are worth every penny. Work hard, always conduct yourself with integrity, and give a hundred percent at each inspection.
Charge what you’re worth, and then be worth it. The rewards will come.