Five things I've learned about quoting correctly from coaching builders - part 1

Quoting correctly can be especially challenging for builders who have recently started their own business. Common questions include:

• How do I quote correctly? 

• How do I make sure that I am not 
going to exceed budget? 

• How can I ensure that I charge a fair 
price and make money? 

Of course, a straightforward new home 
is reasonably easy to quote. But when it comes to renovations, larger builds and architecturally designed homes it’s a different story. Unique details and structural particulars can catch you out.You probably know of many 
cases where a builder has underestimated the time a job has taken and lost money. When it comes to incorrect quoting there are many variables to consider. For example the fitness of your team and how fast they work; the skill levels of your builders; the ability of your foreman to plan ahead; the scheduling of subcontractors; rework; wastage of materials etc. to say nothing of unexpected problems or weather interruptions.In this two part article I will share with you five tips about quoting that I’ve learned.

1. KNOW YOUR LIMITS

Some builders are good at maths and love designing spreadsheets for their business, others aren’t. If you struggle with spreadsheets, then be very careful about creating your own to compile quotes. It’s so easy to make a formula error that can cost you heaps. It is also easy to confuse mark-ups, margins, charge out rates, preliminary and general, and profit percentages. What may look like a good quote that wins you the job can in fact have a negative impact on your business.It is better to invest in a good piece of quoting/estimating software and take the time to learn how to use it well.

2. KNOW WHEN TO ESTIMATE

Just because a client asks for a quote
 on a renovation, or a complicated build, doesn’t mean you have to give them
 a fixed-price quote. It may be better to give them an estimate of overall cost and then quote your rates.This is especially true if you are not experienced in such jobs. In that case, you are probably better to spend your time showing your client why an estimate with quoted rates is a better option for them.

Summary

So, don't rush into preparing a quote by hoping for the best. Use your skills wisely and outsource the areas you're not so skilled in, i.e. use quoting/estimating software. Don't feel pressured into fixed price quoting, rather, talk to your clients about estimates with quoted rates.  The next article will follow on with three more learnings about quoting.

Question

What's your number one challenge/frustration when it comes to quoting correctly?