I am producing a price list for quick estimating.
I have 14 different cabinets pre-designed in a traditional style and contemporary style. They are designed to be used to create alcove bookcases, home library's and study's, as a standard product.
For example: a free standing tall open shelf bookcase costs £906.00 inc Vat & an installation price is £156.00 inc Vat plus delivery charged on a job by job basis. The additional installation price means it will be a fitted cabinet instead of a free standing cabinet.
I have started to populate my cabinet list with single unit prices.
My prices are worked out upon actuals, I know when I add an extra cabinet into a number of like units within a production cycle the increase in cost can be minimal.
My problem is when I start to price multiples for example, if I'm fitting out two alcoves, I can justify 2 x standard tall open bookcases and 2 x installation charges totaling at £2124.00, this keeps me in the ball park.
If I'm fitting out a long wall, I can justify 3 x standard tall open bookcases and 3 x installation charges totaling at £3186.00, this keeps me in the ball park.
If I get up to 4no. like cabinets in a row, I could do the fourth cabinet for half price and waiver the installation price.
I guess 4no. cabinet situation I could charge the full standard price for the four cabinets along with 4 standard installation prices, wait for a gasp from my prospect and then decide to offer 3% discount if they sign my retainer agreement today or better still pay a deposit!
I'm interested in how anyone else approaches this situation?
To be clear, are you actually hearing the gasp from customers, or are you just anticipating this will be the case? There are certain situations that do allow for us to see at times, that our square foot prices seem high when quoting large jobs. I am talking shutters here, not cabinets, but still the same concept. Truthfully I find that since I am doing more work, at a fair rate based on single units, that I should welcome the opportunity to make some extra profit. I personally choose to stay with the higher prices. I lose a few, but I get the majority of them. If I feel it is a competitive situation, or there is some other reason I really do want the job, I do offer a small percentage discount. No formula for it, usually just some token discount I can live with, and still be happy with getting the order. Even then, I never use a conditional quick close comment to get an immediate commitment, preferring to allow the customer to decide in their own time frame.
I agree, I used to stress over why clients went off the boil after all the work I put into producing formal proposals (quote and drawings) I've learned to let them take there own time. They will respond in there own time.
However my latest effort is to completely change my old system, by going in on my first consultation with a quick estimate, and good examples of work and rendered layouts combined with professionally taken photos all of which I have. This will in my mind save me doing the 5/10 hours it takes to do a proposal with drawings and only to here a no.
I'm afraid my difficulty is I have a lot of enquires to deal with befor I make a sale. Ratio is about 2 sales made in five, I produce a high quality job. I am adjusting processes to speed up the process at low cost to standardise the two ranges of bookcase all made from like parts to be able to offer the same quality at a lower price and still have the option for the bespoke work. The key thing is to have a fast and accurate estimating stage.
Graham, I see your situation in the same way a lot of us approach quoting. How to minimize time up front during estimating and quoting, trying to get enough information to be accurate, but without giving a potential customer the feeling that we won't give them the time they deserve as a paying customer. I actually don't give estimates in window treatments, but I do occasionaly give estimates with closet systems. After going back and forth on the amount time I spend on drawings and pricing, showing accessories and answering questions, making those extra free trips, I finally just decided to do all these things, whatever time it takes. (All for no charge, long distances with travel are another matter.) And then by doing this, I am content with giving my higher prices to the client. I think many of my customers recognize my extra effort during this quoting phase, and weighs this into their consideration that my attention to detail will carry over into the actual making and delivery of product. Now many of my customers are prequalified and most are referrals, which means I am in a better position to do this than with a cold client. I still lose few, but when I give my quotes my best effort, somehow I can easily accept that this particular person was never going to be my customer anyway. Plus I think in the long run, I did myself a favor by helping that customer come to the conclusion they wouldn't be using our services any further. Off subject to get to this point, but when my prices seem high, even to me, the reality is after the job, those prices and earned profits were well deserved. I think the idea of a quick estimate as a time saver is great, as long as the quickness doesn't undermine your final quote. I have avoided estimating for the most part, as I tend to low ball an estimate to keep a customer interested, more a personality issue than a business decision. Then I eventually have to over come and justify any pricing that is higher as the project enters a final quote. Too many customers have an excellent ability to retain low numbers once they are presented, even after being given a more accurate and higher price later on.
Hi Mitch, I agree with what you say and indeed I produce a proposal which is a nice piece of work including high rendered images and detailed specification the client is in no doubt as to what they are getting, no fudges. I strongly believe I have been one off the most innovative business in my part of the world when it comes to delivering a proposal, and yes it does win jobs. The software I use not only does some of the highest renders in the industry, but makes it easy to draw and present, but within half a dozen clicks I have an optimised job ready for the saw, this used to take a lot of reworking in the past. This basically means if the client agrees I can hit the button and the job is ready for the shop floor.
My quick estimates are based on accurate actualls (jobs which I have timed and quantified)
I've only recently started doing this and the effect has been a bit of a game changer. All I have ever done in the past is proposals and less and less bench time.
My business finances are a balance of available build hours around the year running jobs back to back, including me doing 25 hours bench time, this quickly became unrealistic as soon as I became an employer and took on an apprentice and 1 skilled man. What I did to balance my hours was charge my ours out to pre production which is mainly proposal work (not for free) My decision was I to reduce proposal work time and try to increase my bench hours as much as I like the design and sales end I love hands on machining. It took some investment and a lot of work, but I feel I'm getting there with it more and more.
Last week, I picked up a deposit for a 3k job within 30minute consultation and did the contract, invoice and design by email. The estimate was accurate during that consultation so was the image and design which I already had prepared other than that the bookcases needed to be a slightly different size.
I was back on the bench this week for 14 hours (a first in a long time) and not worried about letting sales slide. I had passed on two enquires using this system in the same week. As I no I'm not wasting as much time with the tyre kickers, even my stress levels have come down :-)
My final effort would be to get handy with a portable printer to hand over the contract and invoice within the first hour of consultation.
If I have deviated of my post question, to more of a statement, I guess I've been more curious to see if other people approach the situation of estimating in a similar way adding value to there hours. I feel I'm getting back to why I got into this in the first place and not wasting my time with enquiries who have miss read my business... This brings me to another question for a new post!
Just to be clear about what you and your customer are understanding: A Quote is a fixed price that you will do the specified work for. An Estimate is a SWAG based on a loose set of information about what is wanted. The customer must understand the difference! When a customer insists on an estimate we always give a range and try to explain why there is a range. Lamborghini or Miada both nice cars but slightly different prices.
Hi Larry, thanks for your post.
At the start of the year I sat down with a retired bank manager and we designed a quoting, sales pipeline and project Managment system using Microsoft Access. We decided to stop estimating all together to save on an extra step in the sales process and the plan was to qualify the enquirer through the quote, I was afraid I was going to miss that easy estimating step, within no time I found the new system to work more efficiently, the main reason being it created a standard and discipline, quoting is one step the next is to invoice from a statement invoice of which you don't do unless the job is agreed of the quote and subsequently goes live.
However I am back to estimating purely with my standard range prices which are accurate, less range of price ambiguity. Personally I find what I do encourages prospects to say what they mean, an estate agent said to me one day 'buyers are liars' maybe that quote is a bit harsh but I believe open conversation can be like dropping your defence to some people. I'm an plane open speaking and easily approachable person, I just find open clear conversation to be more productive in meeting everybody's needs, using inaccurate estimates to me doesn't achieve this.
The other plus for being accurate never mind the extra efficiency in process, is the prospect expects us as a professional to no our prices, and I'm guessing that's why they missuderstand the meaning of an estimate and have a great ability to remember inaccurate low estimated prices.
FORUM GUIDELINES: Please review the guidelines below before posting at WOODWEB's Interactive Message Boards(return to top)
WOODWEB is a professional industrial woodworking site. Hobbyist and homeowner woodworking questions are inappropriate.
Messages should be kept reasonably short and on topic, relating to the focus of the forum. Responses should relate to the original question.
A valid email return address must be included with each message.
Advertising is inappropriate. The only exceptions are the Classified Ads Exchange, Machinery Exchange, Lumber Exchange, and Job Opportunities and Services Exchange. When posting listings in these areas, review the posting instructions carefully.
Subject lines may be edited for length and clarity.
"Cross posting" is not permitted. Choose the best forum for your question, and post your question at one forum only.
Messages requesting private responses will be removed - Forums are designed to provide information and assistance for all of our visitors. Private response requests are appropriate at WOODWEB's Exchanges and Job Opportunities and Services.
Messages that accuse businesses or individuals of alleged negative actions or behavior are inappropriate since WOODWEB is unable to verify or substantiate the claims.
Posts with the intent of soliciting answers to surveys are not appropriate. Contact WOODWEB for more information on initiating a survey.
Excessive forum participation by an individual upsets the balance of a healthy forum atmosphere. Individuals who excessively post responses containing marginal content will be considered repeat forum abusers.
Responses that initiate or support inappropriate and off-topic discussion of general politics detract from the professional woodworking focus of WOODWEB, and will be removed.
Participants are encouraged to use their real name when posting. Intentionally using another persons name is prohibited, and posts of this nature will be removed at WOODWEB's discretion.
Carefully review your message before clicking on the "Send Message" button - you will not be able to revise the message once it has been sent.
You will be notified of responses to the message(s) you posted via email. Be sure to enter your email address correctly.
WOODWEB's forums are a highly regarded resource for professional woodworkers. Messages and responses that are crafted in a professional and civil manner strengthen this resource. Messages that do not reflect a professional tone reduce the value of our forums.
Messages are inappropriate when their content: is deemed libelous in nature or is based on rumor, fails to meet basic standards of decorum, contains blatant advertising or inappropriate emphasis on self promotion (return to top).
Libel: Posts which defame an individual or organization, or employ a tone which can be viewed as malicious in nature. Words, pictures, or cartoons which expose a person or organization to public hatred, shame, disgrace, or ridicule, or induce an ill opinion of a person or organization, are libelous.
Improper Decorum: Posts which are profane, inciting, disrespectful or uncivil in tone, or maliciously worded. This also includes the venting of unsubstantiated opinions. Such messages do little to illuminate a given topic, and often have the opposite effect. Constructive criticism is acceptable (return to top).
Advertising: The purpose of WOODWEB Forums is to provide answers, not an advertising venue. Companies participating in a Forum discussion should provide specific answers to posted questions. WOODWEB suggests that businesses include an appropriately crafted signature in order to identify their company. A well meaning post that seems to be on-topic but contains a product reference may do your business more harm than good in the Forum environment. Forum users may perceive your references to specific products as unsolicited advertising (spam) and consciously avoid your web site or services. A well-crafted signature is an appropriate way to advertise your services that will not offend potential customers. Signatures should be limited to 4-6 lines, and may contain information that identifies the type of business you're in, your URL and email address (return to top).
Repeated Forum Abuse:
Forum participants who repeatedly fail to follow WOODWEB's Forum Guidelines may encounter difficulty when attempting to post messages.
There are often situations when the original message asks for opinions: "What is the best widget for my type of shop?". To a certain extent, the person posting the message is responsible for including specific questions within the message. An open ended question (like the one above) invites responses that may read as sales pitches. WOODWEB suggests that companies responding to such a question provide detailed and substantive replies rather than responses that read as a one-sided product promotion. It has been WOODWEB's experience that substantive responses are held in higher regard by our readers (return to top).
The staff of WOODWEB assume no responsibility for the accuracy, content, or outcome of any posting transmitted at WOODWEB's Message Boards. Participants should undertake the use of machinery, materials and methods discussed at WOODWEB's Message Boards after considerate evaluation, and at their own risk. WOODWEB reserves the right to delete any messages it deems inappropriate. (return to top)
Forum Posting Form Guidelines
The name you enter in this field will be the name that appears with your post or response (return to form).
Personal or business website links must point to the author's website. Inappropriate links will be removed without notice, and at WOODWEB's sole discretion. WOODWEB reserves the right to delete any messages with links it deems inappropriate. (return to form)
Your e-mail address will not be publicly viewable. Forum participants will be able to contact you using a contact link (included with your post) that is substituted for your actual address. You must include a valid email address in this field. (return to form)
Subject may be edited for length and clarity. Subject lines should provide an indication of the content of your post. (return to form)
Thread Related Link and Image Guidelines
Thread Related Links posted at WOODWEB's Forums and Exchanges should point to locations that provide supporting information for the topic being discussed in the current message thread. The purpose of WOODWEB Forums is to provide answers, not to serve as an advertising venue. A Thread Related Link that directs visitors to an area with inappropriate content will be removed. WOODWEB reserves the right to delete any messages with links or images it deems inappropriate. (return to form)
Thread Related File Uploads
Thread Related Files posted at WOODWEB's Forums and Exchanges should provide supporting information for the topic being discussed in the current message thread. Video Files: acceptable video formats are: .MOV .AVI .WMV .MPEG .MPG .FLV .MP4 (Image Upload Tips) If you encounter any difficulty when uploading video files, E-mail WOODWEB for assistance. The purpose of WOODWEB Forums is to provide answers, not to serve as an advertising venue. A Thread Related File that contains inappropriate content will be removed, and uploaded files that are not directly related to the message thread will be removed. WOODWEB reserves the right to delete any messages with links, files, or images it deems inappropriate. (return to form)
The editors, writers, and staff at WOODWEB try to promote safe practices.
What is safe for one woodworker under certain conditions may not be safe
for others in different circumstances. Readers should undertake the use
of materials and methods discussed at WOODWEB after considerate evaluation,
and at their own risk.