2 min read
Working as a self-employed contractor can be incredibly freeing, as there’s nothing quite like being your own boss. Whatever trade you deal in, price quotes are a fundamental part of the business that so many get wrong. And getting it wrong could mean knocking a great deal from your annual income.
We live in a time-poor and demand-driven economy where customers expect to know immediately how much a job is going to cost them. So, if you want to know how to create quotes efficiently and make the most of the opportunity they afford you, we’re here to help.
What is a price quote?
When you are bidding for custom, you’ll typically start by handing a rough estimate to the client, detailing what each stage of the work might cost in terms of labour and materials. The quote, meanwhile, takes things a step further. It holds significantly more legal value than an estimate and represents a binding contract in many countries. This also means you can’t charge more than what you’ve quoted unless there are mitigating factors.
When a customer asks for an estimate they are shopping around, but when they ask for a quote it means they are seriously considering your services. Typically, it’s a final fixed price offer that is settled on after a lengthy discussion with the client and thorough calculations concerning material and labour costs.
But what should you be including in your quote and what considerations should you be making when it comes to pricing?
Pricing your quotes
Before creating your quote, there are several factors to consider. For example, are you 100% sure you understand the requirements of the job? Because once the price is set, there’s no going back. Also, think about whether or not you can realistically meet the set deadline. Never over-commit to work you might have to pay extra to finish.
Also, check your prices against the competition and check up on the latest variable costs like materials. Take everything into account when settling on a final price, and remember, you’re in this to make a profit so don’t forget about the profit margin.
Good price quotes should always include the following:
Business information – The name of the company, its trading address and client details.
Pricing – An itemised and transparent price explaining every component of the job. All applicable taxes should also be included.
Dates – The date for delivery of the service, as well as the valid date for the quote, which is typically 30 days from the date of the initial quote.
Terms and conditions – All payment terms should be written in simple language to avoid confusion. Space should also be left under the terms and conditions for both the customer’s signature and your own.
Price quote tips
Keep all quotes clear, professional and comprehensive.
Always include a call to action at the end.
Send all quotes within 24 hours. This is a much simpler process if you’re using digital accounting software.
Follow up after a few days.
If a customer has a problem with a quote, always ask them why. We learn from our mistakes.
While physical quotes are still used by many contractors, the flexibility and reliability of professional online quotes have helped them win plenty of fans in recent years, particularly in the wake of the pandemic.
Using an online accounting platform like Xero, you can see which quotes have been sent, whether they’ve been viewed and, crucially, whether they’ve been paid. Customers can also accept, decline and comment on the quote so you can make adjustments, edit and resend on the fly.
We can help
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with.
For contractors, GoCardless offers greater visibility over when payments are made and can be used to collect payments directly from customer bank accounts, making the process easy and cost-effective, effectively eliminating the potential of late payments.