When I give people a price I like to make it clear to them that they need to make their minds up quickly, in order that the ‘special’ price I’ve given them still stands. On the other hand, if their circumstances are such that they can’t proceed quickly, I don’t want to put them off getting back in touch when they are ready.
Any thoughts on what constitutes a reasonable time limit? I think a month sounds pretty good.
John
If my baby don’t love me no more, I know her sister will.
Replies
Well, it depends on your situation. With materials prices likely to be volatile in the near future, any proposal that includes materials needs to have a fairly tight time limit, or a provision for recalculating materials costs. Also, if work is likely to pick up in a few months, you need to factor that in.
Of course, the tighter you are with your limits, the tighter the customer has a right to be with regard to completion date.
My last roofer had a two-week limit on the proposal, IIRC, which was fine since things had been pretty well negotiated out by then, and we could pay cash. But in other cases acceptance may be contingent on getting a loan, etc, and you may need to allow for that.
Speaking as a HO, a month is probably good, though. Any longer and there's no sense of urgency. Much shorter and the customer may feel too pressured. A commercial job may require a longer limit if it has to bubble up to the corporate bean counters and back.
It doesn't hurt to leave it "open" to a degree -- saying that certain costs and schedules must be recalculated if the proposal is not accepted in 30 days (vs saying that the proposal is "invalid" after 30 days). This doesn't create a "drop dead" date, but it keeps the pressure on and gives you an "out" if prices or circumstances change.
It would be wise to run any standard language you pick past a lawyer, if you're talking fairly big contracts. You need to avoid writing something that could be interpreted as an enforceable commitment before the contract is signed.
I'm not a contractor, but in the proposals we write in our business, we add the phrase "Quoted fees and services are valid for 30 days from the date of the proposal".
It's fair and easy to defend - market conditions and cost or doing business are always changing.
"in order that the 'special' price "
I hope that you are not using that phrase in your presentation.
IIRC that you are in England and it might be different there.
But here that sounds like the speil that scam artist use.
A simple, this price is only good xx weeks, because of changing cost will do.
I see a lot of proposals that say:
"This proposal MAY be withdrawn if not accepted within 30 days". (Emphasis added)
I don't know why anyone would have any problem with that. You can always hold the price if you want to.
Actually, I need someone to lean on so I don't fall.
I generally allow 7 days on my proposals. It's not so much about the price as it is about the tentative scheduling discussion that always takes place when I deal with a new prospect. They ask "how much" and "when" at about the same time. I usually tell them about when I can start, and give a price. If it's not accepted quickly then it's over. I have found that there's little point in dealing at length with people who are not ready to proceed now.
With the current volatility in material prices our suppliers are now quoting for 24 hours only. They've coined a word, which I do not have the slightest idea how to spell," force major".
They current cost of pvc conduit and copper wire has increased 60% in two weeks and no one locally will hold a price for more than a day.
This has forced us to add a notation to our usually 30 day price that the contract price will reflect any and all material increases until a contract is signed.
As industrial contractors everyone is in the same boat but where we are getting hosed is old,signed contracts that are just now getting built.
Good luck hope we all can weather this together.
"This has forced us to add a notation to our usually 30 day price that the contract price will reflect any and all material increases until a contract is signed."Unless they are all small projects where you can buy all of the materials when the contract is signed you need to modify that constract for a material prices escalator clause.
That sounds like the correct way of saying what we are attempting...the majority of these projects are city water systems, booster pump stations,telemetry,and waste water,... all drag through submittal process with engineers and most can not be value engineered. We also act as general contractor depending on bond requirements.
I'm not sure anyone is prepared for the real material cost increases we are seeing right now+ the inability to get trades. There is another post where someone can't get carpenters in Seattle. We can't get anyone 140 miles east of there and it isn't even elk season....
I know what you are talking about.I write software for a telemetry company (Micro-Comm) and I will get asked about a project 6-12 months are more before they get designes and then it might be another 6 months before startup.
Pye, The word is "Force Majeaure", meaning, an unforeseeable course of events that excuses a person from the fulfilment of a contract.The commercial reality is, it would be doubtful in a court of law you would successfully win this one, as you know full well that prices of materials are constantly on the rise. If you are giving a quote, at that stage you do not have a contract, you are only making an offer, however you should make the 'rules of acceptance'e.g. this offer and price will stand until October 21, 2005. If you do not put a time frame on the offer you can be held to it if the person comes back in 6 months time and accepts your offer. The bottom line on giving a price for a job is to spell out ALL of the conditions in the first place. When either party starts to talk about contractual obligations and look at the paper work then expect to be paying in time and money to sort the issue out. Without getting too technical, there are 6 essential elements to a contract.They are 'Intention to create legal relations', 'Offer and acceptance', 'Form or Valuable consideration', 'Legal capacity','genuine consent' and 'legality of object'.Warrigal
Thank you for the definitions.
It appears we are heading for a new ball game with contract/proposals.
john,
one of the prime reasons that I seldom give written quotes.. I tell people my number and will often write it on the back of my business card for them, but if they want a quote they'd better be ready to sign it on the spot..
If you don't have a solid enough relationship with that customer to determine if he's ready to buy or not then you aren't ready to give him a number..
Let me point it out differantly. You look at all material costs and write a quote.. Tomorrow you recieve a price hike that means if you do the job at that price you will lose money...
Now what? Go back and tell them your price is higher?
Or you give an estimate using your less efficent crew to build it because you are holding your more efficent crew for a more profitable deal..
That deal falls thru and now you would be forced to lay off some good workers if you can't find work for them.
Do you go to them tomorrow with a new lower price?
Most of my smaller jobs involve pretty standard and basic materials. For those I dont worry.
Besides, if they dont say yes within a couple of weeks then it isnt going to happen anyhow. By then I already got paid for working up the quote, so no biggie.
For a landscaper I do some work for, I put 'valid for 30 days' on the quote. As I know most wont get going for months anyway I also add "material price increases may result in a revision of the quote"
The job I am doing now wasnt going to actualy start for a few months after quoting, so I added 5% to cover any rises and unexpecteds.
Whatever it was.................I didnt do it.
AJinNZ
You guys are putting too much effort into something that can only eliminate you..
A quote is simply an estimate of what it will cost.. Take you best shot based on what you know and scribble it on the back of your business card.. Look them in the eye and tell them your number and hand them your card..
I sell a quarter of a million dollar cranes that way, you should be able to sell a simple job that way as well. Get a reputation for sticking to your word and it's enough.
That quote you put sooo much effort to will be judged three different ways. first by simple second grade math, heck there's your number! If it's reasonable that won't eliminate you.. Second what you were able to sell him about your abilities and there is no way a quote will ever do that.. And third intangibles, delivery, terms, insurance, your ability to keep a neat jobsite, how friendly you are, etc. and there is absolutely no way a quote will ever sell that..
Stop quoting and start selling.. Don't be afraid.. it works! Just because that's not the way you've done it in the past is not a reason to not do it that way in the future..
My contracts are all spelled out on the tailgate of my pickup right in front of the customer.. what I'll do and what it will cost plus payments and schedules.. talk to your customers and write down what you agree on.. Don't worry about the legal stuff! Heck if they hire a lawyer you're screwed already so just bend over and take it.. (or add the cost of a lawyer to the screwing you're gonna get)
Don't worry about spelling, they aren't hiring you for that, don't worry about your penmanship or do as I do, print out everything. There is something simple and elemental about doing business that way that makes people feel comfortable..
I sell a quarter of a million dollar cranes that way, you should be able to sell a simple job that way as well.
Actually, there is an inverse law thing that applies to stuff like this. The closer a project is to everyday stuff, the closer the figures are to everday figures, the more people are able to grasp them, and dispute them. A good example of this sort of thing is local government, where it is well known that multi-million dollar projects can be passed much more easily than something like a simple road sign.
JohnIf my baby don't love me no more, I know her sister will.
Yep, Parkinson wrote a book about that. Or was it Peter. In any event, sit in on a board meeting at a big company. They'll spend 5 minutes discussing the purchase of a $3million computer, and 30 minutes discussing the purchase of hand soap for the bathrooms.--------------
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DanH
I can understand that, major decisions are made from input given by underlings and that left trivial issues to be battled out.. But the difference there is that boards are made up of diverse people with dissimilar goals and objectives while home decisions are made by the family decision maker.
Part of the problem may be that men tend to discuss items to the husband from a male perspective while the real decision maker is the wife who falls back on second grade math since she wasn't included in the values judgement session that may have taken place. {To husband}, "these shingles have a thirty year warrantee and will withstand higher winds,,,.. {to wife} isn't this the color you wanted Mrs. Smith?
Another example: Worked for an outfit that designed and sold a small computer many years ago, pre-PC. Originally the unit was designed for engineers and the like -- ideal for doing engineering calculations, etc. And engineers were surveyed and said they could easily justify the $10K cost.When the unit went on the market, though, no engineers were buying. Turns out that they (surprise!) have to justify the unit to the bean counters, and were running into resistance. But, also unexpectedly, small businessmen were buying the unit left and right -- they could see the benefit and had to justify the cost to no one except themselves.
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BTW, don't ever try to negotiate with my wife. No "second grade math" there (she has an engineering degree too) and she's a pretty hard-nosed negotiator (even though she claims she hates to bargain).--------------
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BTW, don't ever try to negotiate with my wife. No "second grade math" there (she has an engineering degree too) and she's a pretty hard-nosed negotiator (even though she claims she hates to bargain).
--------------It's the ones that hate to bargain that make the hardest-nosed negotiators. They like to cut to the chase, and their first offer is often their last.Personally, I'll shop rather than negotiate any day. It's because I like to make my value judgements without the pressure of an ongoing negotiating session. Once I've decided what I want, what the going rate is, and how much it's worth to me, there's nothing left to "bargain" about. (Oh, and no second grade math here, either. Math major in college, engineering master's degree, and more.)Rebeccah
Rebeccah,
You'd rather shop than negotiate,,
Hmm it sounds like the same virus all women seem to be infected with.. <G> (I, know I'm a sexist)
The Gene in Men is that they tend to buy rather than shop.. (here's the shirt I like, I'll buy it) but negotiate is the way some companies do business.
I used to deal with fortune 500 companies and certain companies would refuse to accept your first offer. Eventually we figured out which compaies were like that and then always marked up the price accordingly. When we went into negotiations we scream bloody murder as we discounted it the required 10% (or whatever their magic number was) Found out later the buyer was paid a bonus if he negotiated every contract down the required 10%
Later companies got smart and put tiger teams in, they were several hard headed buyer types who's job was to get an additional 2% or whatever their boss decided he needed.. The first time I ran into that I got stubburn and refused to sell at less than a decent profit level.. They wound up buying a greatly inferior product. And for over a year attempted to rub my nose in it every chance they got.. As complaints from the field mounted about the inferior replacement product, pressure began to be applied to buyers to "standardize" purchases even at the expense of price.
From buddies still selling to fortune 500 companies.. I hear things have gone around full circle again with standardization now being key!
---- Hmm it sounds like the same virus all women seem to be infected with.. <G> (I, know I'm a sexist) ----;-)Actually, my shopping gene is a bit different from that of the typical woman. It's typically on-line and consists of researching and making price comparisons. I hate going to stores to try stuff on, although for certain kinds of purchases you can't know what it is you're getting unless you see it in person. But I hate buying a car even more. And the purchase of my first home last year -- well, that's a topic for a whole 'nother thread. I suppose it's different if your *job* as a buyer is to negotiate. Then you go into it knowing that the whole thing is a game (albeit it can be one with some high stakes). But I don't like to play games when I'm buying something for myself. I can do it, and I'm actually pretty good at it, but I don't enjoy it. Certainly not enough to ever want a job as a buyer.
Sounds like you are an experienced and successful salesmen but not necessarily a contractor. Selling home improvements or, for that matter, homes is much different than selling a finite piece of merchandise like a crane to a professional.
Matt,
I didn't invent this appraoch.. I learned it from a guy who brokered used airliners.. He learned it from a car salesman and he learned it from a siding salesman..
There is a book along these lines called Shut up and Sell.
Intueitively it sounds wrong and emotionally we all have this need to convince others. Yet effective selling means much of the tradional approach is wrong..
Frenchy
I hear what your saying. However my hit rate has gone up doing detailed quotes, my 'screwing rate' is zero and I get paid to work up that quote.
Which has 2 purposes, I dont waste time on tirekickers looking for a number and if they dont pay the small fee then they wont go ahead with the job anyhow.
The biggest plus is, I use so many different products and there are so many variables in my work that a customers eyes would glaze over long before I got through 1/2 of it.
My quotes have all that info in them in addition to how I do things. That quote backs up my selling on the first visit but gives them the chance to read and absorb in their own time.
Even if they dont read it but it conveys the right impression.........it worked.
I had one customer who said......"Anyone who takes the time to put together a quote like that is going to do good work" ( I got the job and got paid without delay )
Whatever it was.................I didnt do it.
When we sell a job we offen find outselfs breaking down the bids into differnet areas. Say for excample we doing a kitchen, you have demo, plumbing, wiring, drywall, paint, cabinets and flooring. I can spec all itiems so no misunderstandings occur. Fixtures alone can eat alot of time with clients so I offen just add a dollar amount for fixtures and let them decide, it is their home. If they pick something that is more we issue a change order for the extra amount if it is less I issue a credit to the last bill.
With the market changing concerning matericals we have added a clause concerning matercal increases before contract signing. At the moment I'm sitting on a few hacks of OSB I bought for a upcoming project before the big floods and winds.
Works for us
John and All
When I sold Chemicals I had a $150K customer that wanted me to give him a firm price for one year. In order to do that I had to estimate the possible price fluctuations of the components which was a crap shoot. The variables were about 30% over the period. I tried to say that if I had to give a firm quote for one year I had to include the possible fluctuations which meant I couldn't give him the lowest price.
I suggested a compromise where I would give him a lower price of 20% and only increase it if a component price rose by more than 5%. He refused only because he had to commit to his head office of a firm price for the year.
I don't think that an " incremental materials cost clause of x% over the quote clause would be inadvisable. If it is, remember my old Sales Managers saying
Sell it at a loss and make it up on volume"
Cheers
Poorsh