- Quoting costs money!
- You should be charging for your intellectual property
- Factor the cost into the price of the job
We all need to be paid for the work we do, right? Right!
Quoting is no different. It takes up truckloads of time, so we must be paid for it or we’ll go broke!
The question is: how?
The public are not too keen on paying for quotes, especially when they are shopping around. They don’t want to spend $500 before the job has started, and there is no way in hell a large contractor is going to pay you directly to price a project!
Go stealth – factor the cost into the price of the job
Large companies do this, and you should too! Quoting is an overhead and as such its cost must be factored into every project you price.
- Estimating team – If you run an estimating department then the cost of running that department (wages, software, computers, etc.) becomes a line item in your overheads. The total overheads are then added to ALL quotes as a percentage on top of the COS (Cost of Sale) in the Gross Profi t Margin
- One-man band – The same rule applies. You estimate the number of hours you spend in the year pricing work, plus all the other expenses associated with estimating (travel for site visits, software, etc.), and you add that to your overheads. You then recoup those overheads on each project by making sure the amount is covered in your Gross Profit Margin.
Direct – charging for intellectual property
There definitely is a case for directly charging for quotes, and that’s when the quote includes your intellectual property. For instance, when a landscaper is asked to price up the renovations on a garden without a design; or if a plumber finds himself solving ancient piping problems before he can quote the bathroom renovation. In these cases, the tradie’s knowledge, built from years of experience and training, should rightly be charged to the client. These projects take more time to price; however, the advantage is that it’s hard for others to compete directly with you on a like-for-like basis.
Below is a diagram showing you when it’s a good idea to go stealth and when it’s time to charge directly.
At the end of the day quoting is an overhead and overheads should be built into every quote to run a profi table business. Whichever way you choose to recoup the cost of quoting, you must do it!