4 Best Quoting Practices For Your Service Business

4 Best Quoting Practices For Your Service Business

Providing accurate quotes to your leads and customers is the first step to lift your brand and increase profits.

Giving inaccurate quotes can lead to net losses and/or losing customers.

If you want to improve your quoting game processes, you may want to follow these best quoting practices for businesses in the service industry:

Use Software To Generate Quotes

Generating quotes for different jobs is a tedious yet crucial process in your business. Human-generated errors can easily cost you and maybe even your customers.

Just a simple missing zero can turn a USD$1,000 job into a USD$100 one. To minimize such errors, you should utilize quotation-generating software.

For example, if you have a plumbing business, it’s recommended that you get plumbing software such as that from Jobber.

In addition to keeping you on top of your quotes, it can help you automate some repetitive management and sales work in the process.

Be Cautious When Providing Quotes And Estimates

Some people interchange estimates and quotes, but remember, both are different. An estimate is an approximation of your service’s price—a calculated guess, if you will.

It may wildly differ from the actual cost of the project. 

An estimate’s purpose is to give your customer an idea of how much they’ll need to pay.

And it’s important that you let them know that the actual price may go higher or lower depending on the job or after carefully assessing the work required.

On the other hand, quotes are fixed prices written on a contract. Once the customer agrees to it and signs the contract, it’s legally binding.

Regardless if you spent more or less raw materials or person hours on the job, you can’t change the price anymore, and the customers are obligated to pay it as long as you fulfill the contract.

Take note that you should only give quotes when you’re entirely sure about the actual cost of the job or project.

Depending on the type of service you provide, you can only give a quotation after you survey and inspect the job site and the problem your service will solve.

Keep Quotes In Writing

Keep quotes in writing for service business

While it’s stated that quotes are legally binding if a customer agrees on the price and signs a contract, know that verbally agreed upon quotes can also be legally binding.

While most customers aren’t aware of this, you should err on the side of caution. Remember that verbal communication can lead to misunderstandings and potential loopholes. (1)

Thankfully, if you’re using a quote management app, you wouldn’t worry about this.

However, if your business is still in its infancy—say that you only recently started a pressure washing business—and can’t afford to have this kind of convenience yet, be sure to provide your quotes in writing only.

On the other hand, you may also want to send estimates in written form. Say that you’re in the construction business.

If you want to send estimates fast, you may want to use a construction estimate template generator to make your sent document look professionally drafted.

You can also utilize it to convert your estimate into an invoice whenever you need to.

Set An Expiry Date, Follow Up If Delayed, And Revise The Quote If Needed

Know that when you send a lead or customer a quote, it’s not guaranteed that they’ll accept it right away.

Even if they agree with the price and know that they need your service, circumstances may prevent them from signing and giving the approval after they receive your quote.

Once the issues that prevented your customer from OK’ing the job order have been resolved, they may resume their talk with you and approve the quote.

However, because material prices, employee salaries, and overhead costs may change, the old quote you provided may put you at a loss.

Because of that, you need to set expiry dates or ‘valid until date’ clauses for your quotes together with the usual terms and conditions, standard business information, pricing, payment terms, and space for signatures. (2)

Expiry dates protect you from experiencing net loss because of outdated prices. Expiry dates can also allow you to have an excuse to follow up with your customer if they didn’t approve the quote.

Also, don’t be afraid to revise and provide customers a new quote even if the previous one hasn’t expired yet.

As long as it’s not signed, it’s legal to give the customers updated quotes. However, only do so if the revision is genuinely needed.

You wouldn’t want to upset and lose them. After all, it’s 5 to 25 times more expensive to find new customers than it is to retain existing ones. (3)

Conclusion

To keep your business afloat, you should never make critical mistakes such as providing quotes that can lead to losses or sales objections because of your pricing. With these best practices, you can eliminate those mistakes from happening and push your business one step closer to success.

References:

  1. “Tips For Quoting”, Source: https://www.business.qld.gov.au/running-business/marketing-sales/sales/preparing-quote/tips 
  2. “How To Make Price Quotes Work For You”, Source: https://www.xero.com/uk/resources/small-business-guides/business-management/price-quotes/ 
  3.  “Customer Acquisition Vs. Retention Costs – Statistics And Trends”, Source: https://www.invespcro.com/blog/customer-acquisition-retention/