Why are Quotes Important?
Whether you are a large or small business, if you want to let a potential customer know the cost of the goods or services you can provide before they decide to purchase you will need to deliver a quotation. When you send that quotation, it commits you to a certain price. This is why quotations are used mostly when costs are relatively stable and the services/goods to be provided can be accurately estimated (labour, cost of raw materials, etc.). An accurate quotation requires careful thought – can you truly deliver to your client for that price within that timescale?
Your quote needs to be well-written in order to demonstrate your professionalism and to meet your business's trading and consumer obligations. It also protects your business from legal and financial risks.
Developing quoting skills will help you win work and build your customer base. Always quote in writing to avoid confusion. Remember, customers tend to get at least 3 quotes for expensive products or services. Think about how you can distinguish yourself by creating a unique selling proposition.
A good business quotation will include the following:
1. Reference Number
It's important to give your quote a unique reference number so both you and your client are sure about which quote is under discussion. This is particularly useful if you have to revise your quote or issue a new one.
2. Business Details
It's best (and most impressive) to use your company's letterhead. It should always include your name, business address, contact telephone numbers and email address.
3. Greeting
Open your quote with a friendly greeting and thank your customer for the opportunity to quote.
Great Example Quote
Quotation Software helps, by prompting the user to include specific information, such as 'Cover Letter Text' and more.
4. Job Specifics & Total Cost
Detail the specifics of the job and outline what the costs cover. Indicate what is not covered: for example, the cost may cover parts and labour, but not include delivery.
5. Breakdown of Costs
Describe the job proposal, detailing the elements involved. Itemise costs for labour and materials.
If you're quoting to supply products:
- check your quantities - ensure you can provide the requested quantity before you quote
- consider the logistics – can you purchase, store and supply the products within the required time without incurring prohibitive costs?
- check delivery requirements – does your customer want the products delivered?
- look for overhead costs - thoroughly research the job and all logistics. Unforeseen costs can shrink your profit margin.
If you're quoting to provide services:
- keep accurate records - log the time you spend on various tasks; the details will be invaluable for quotes and budgeting in the future
- compare the job - use previous service contracts; get advice from your peers
- be realistic - don't underestimate the amount of time you will spend providing your services, and make sure any flat fees you quote are carefully considered
- identify your additional costs - charge for any additional costs (disbursements) that your business will incur.
6. Variations
Explain how different scenarios or variations will affect the cost: for example, with or without installation.
7. Schedule for Work
Indicate when you will start the job and how long it will take (do not under-estimate!). If you win the job you will be contractually obliged to finish it in this time so make sure it is feasible. If your schedule is based on variables, such as good weather, make sure you indicate this.
8. Payment Terms & Conditions
Indicate when you require payment. For example, deposit, lump-sum, periodical payments, half up front and the rest on completion.
9. Quote Expiry Date
Clearly note the date you need the quote accepted by, especially if prices change quickly in your industry. Make sure you give your customer a friendly reminder before the expiry date.
10. Customer Acceptance Signature
Include a dated 'sign here' statement to confirm the agreement and to accept the terms and conditions.
Conclusion
Many businesses rely on spreadsheets and word-processing tools to produce quotes. You may like to consider buying specialist quoting and estimating software – it makes the job much easier.