8 Steps to Creating Winning Price Quotes
A potential customer has asked you to submit a price quote for their project. This is your big chance to convince them that you’re the right one for the job! What do you do next?
Here’s how to present yourself and your business professionally, clearly and helpfully in a quote that can make the difference between winning and losing the contract.
Understand the legal implications of a quote.
A fixed price quote is more legally binding than an estimate. In many countries, once that quote is accepted by the customer, you can’t charge more than what you originally offered; so it’s crucial to calculate and provide numbers you can live with.
An estimate is a rough idea of what a project is likely to cost, but there’s no guarantee that the price won’t change during the project. Both you and your customer must understand whether you’re giving them a quote or an estimate.
1. Gather information.
If you don’t know everything that will be involved in the job, you can’t correctly price it. Ask questions, discuss options and help the prospect make decisions they’re happy with. The benefits of having comprehensive communication with your customer start right now, and will continue throughout the project.
2. Calculate your costs.
Costs of labor and materials can change frequently. Check that your figures reflect current conditions, and take future conditions into account as far as possible.
3. Consider the schedule.
Can you meet the customer’s deadline without stretching your staff resources? Can any special ordered supplies be delivered in the time frame? Or will you have to pay extra for temporary workers and rush deliveries? These added costs should be factored in now, not come as an unpleasant surprise to you and your client when you’re in the middle of the project.
3. Add your markup.
You deserve to make a fair profit on your work. Your price quote should include a reasonable markup on your costs.
4. Fill out your quote form.
You may wish to use your accounting software to make a professional impression. The following information should be clearly specified:
• Business information including your company name and contact info, client’s name and contact info, customer ID number, quote number, quote submission date and quote valid until date
• Itemized prices describing each component of the project, comprehensive enough to prevent misunderstandings later
• Sales tax or other applicable taxes
• Timetable for completion of work
• Payment terms
• Legal terms and conditions (check with your lawyer or use a template from a government small business website)
• Space for your and your customer’s signatures
5. Send the quote within 24 hours.
Don’t give the prospect a chance to forget about you. If you use cloud accounting software, you can prepare and deliver your quote immediately after the sales meeting.
6. Follow up within 3 days.
Call or email your prospect to make sure they received the quote and ask if they have any questions or points to discuss. This will show that you’re committed to obtaining their business and building a good relationship.
More Tips for Improving Your Price Quotes
• Analyze failures. Don’t be afraid to ask a prospect why you weren’t selected for the job. Good accounting software can also track the quotes you send and how many of them were accepted.
• If a quote must be renegotiated, discuss it with the customer first. You may discover unexpected problems in mid-project, or the customer may decide to upgrade the quoted specs. Not explaining these additional costs to them up front may ruin your relationship.
• Add a quote engine to your website. If the quotes you provide are typically standardized and simple, your website can respond to customers on demand 24/7/365.
Customers will learn a lot more from your price quote than the actual price. They’ll see that your work is professional, thorough and of a high quality standard — all things they look for in deciding who to hire. And that’s why your quote can help you win the job.