Why is estimating and quoting crucial to a business?
Successful estimating work directly affects a business’s ability to acquire new work and maintain profitability. Tradespeople who can produce realistic quotes can be more reliably profitable in their work than those who don’t calculate costs well or factor in variables properly.
👷♀️ Profitability – when you accurately know how to factor in ALL costs e.g. materials, labour and over-head margins, it prevents you from underquoting or overquoting. Underquoting directly impacts your profitability – if you produce accurate quotes it ensures that each job you quote for contributes to your business growth – not just to your business’s survival.
👷♀️ Customer trust - overquoting can also impact on your business’s profitability by losing customer trust and ultimately losing business. A well-detailed quote sets clear expectations and reduces misunderstandings as well as preventing ‘scope creep’ this can lead to happy clients you who tend to give you positive referrals and feedback. (Scope creep is when a job’s requirements, features, or goals expand uncontrollably beyond the original plan.)
👷♀️ Competitiveness - being competitive helps to win you more jobs – but you can only price competitively if you know your ‘true’ costs, while still making a profit.
👷♀️ Risk management - a detailed quote that clearly defines the work and payment terms, is your business's protection against disputes and late payments.
👷♀️ Business growth - accurate and consistent quoting helps you to later identify jobs that were profitable and successful – this help you to make more informed decisions in the future.