Is Your Quoting Process Losing You Money?
As customers move away from accepting ticket prices at face value, more and more businesses are using quoting to generate a price to present to customers. But there are hidden traps in the quoting process that business owners need to watch out for. Businesses who quote often use standard rates, whether they are metered rates, day or hourly rates, or a standard materials markup. But the true cost of taking a job from quote to completion isn’t often taken into account when standard rates are used.
Many businesses have little idea of their true costs, and if they need to discount to win the job, they don’t know at what level they will lose money on the job.
To quote on a job and know that you will make a profit every time, you need to understand the true costs in your business. That comes from understanding the financials, what makes up your fixed and variable costs, and then understanding your breakeven rates when you put the quote together.
So, sit down and have a look at your last few complete jobs. Analyze the actual cost of the resources you put into each job- materials, labor – including overtime and any extra time spent than you’d planned for, and including your own labour, any permits or fees you paid for the job, transport, any other costs, and covering a portion of your everyday overheads. Then look at how much you were paid for the job.
If you found you made little profit, broke-even, or even lost money on the job, then you should be making changes to your estimating and quoting process.
Lisa Walker is a Certified Business Coach with ActionCOACH, the World’s #1 Business Coaching Firm. She has a proven track record of success with both small businesses and in the corporate environment. Business Coach Lisa Walker – When You’re Ready to Be the Best.