Quotes are very common in many industries, and when a customer requests a quote, it usually means that the customer is seriously considering hiring you. This is promising, but the quote stage is also where new business can be lost or won, so it is crucial that this step goes smoothly.
Using the right approach when it comes to quoting is essential in most businesses, and doing so will elicit a better response. Price quotes are particularly useful in that they:
- Provide clarity in communication between customer and business
- Provide a legally-binding document
- Encourage the client to decide on your service
- Structure your pricing system and services that you provide
- Encourage transparency through the protection of both the customer and business
The important distinction between an estimate and a quote
Many businesses have trouble deciding between an estimate and a quote. Whereas an estimate is more casual and is only a general idea of what the final cost will be, a quote is a legally-binding fixed price offer that implies that you have:
- Analysed the work and resources involved
- Determined the requirements of the work as laid out by the client
- Computed the total amount of materials and labour required
“It is important to explain the difference between a quote and an estimate to a client when making a deal.”
It is important to explain the difference between a quote and an estimate to a client when making a deal. Estimates are flexible and only give an idea of the final cost, so there is room for change. A quote is final and legally protects the buyer. Most clients prefer a quote to an estimate because there is less room for increased charges.
Understanding pricing requirements
Since price quotes are legally binding, it is important to ensure that every quote supplied by your company is accurate and well thought out. Here are a few important things to examine when you are considering a quote:
- Does your price quote fully reflect the requirements of the work, and do you understand them?: Double check with the client to make sure you both understand what is expected of the work.
- Are the deadlines feasible?: Only agree to deadlines where you aren’t overcommitting yourself, your resources, or your staff.
- How accurate are your prices, and are they up to date?: Be sure that all parts of your pricing scheme are up to date.
- Is a reasonable profit margin included in the estimate?: The goal of your business is to make money, so it is important that your quotes include a non-obvious profit margin.
The specifics of quotations
Your accurate, wholesome, and concise quote should be a summary of any discussions with the client. Some key information to include on a quote are:
- Business information, the client’s details, and a customer ID or quote number
- Itemised prices and an overall total
- Relevant tax information
- Due dates and timeline
- An expiry/valid until date
- Relevant terms and conditions
- A spot for signatures
Key tips for getting your quotes accepted
- Make a good impression by presenting a professional, clear, and complete quote.
- Be proactive in sending your quotes, within 24 hours of request is preferred!
- Install a quote generator on your website so that customers can always get a fixed-price quote for simple tasks.
- Be sure to follow up soon after delivery of a quote.
- Keep track of your quote success, and analyse why some quotes are being rejected.
While quotes are binding, there is always the risk that the requirements of the job may change. In these situations, it is best to approach the client and negotiate any necessary price increases.
The quote process is long, but so long as you remain helpful, transparent, and courteous with your client, success is within reach!