Estimates are about more than just giving your customer a price. They play a huge role in winning the job.
While your price is a factor, the way you present yourself and your offering through estimates is oftentimes what wins or loses the deal.
Having seen thousands of estimates, ranging from stellar full-blown proposals to terribly made, scribbled “estimates” on crumply paper, I’ll share the 5 biggest mistakes I’ve seen contractors make when giving estimates, and what you should be doing instead.
I can’t tell you enough how often I see estimates used as just a means of relaying your price to the customer. You know what kind of customers pick estimates that simply showcase a price? The kind that always picks the lowest price. Those are NOT the customers you want.
Your estimate is an opportunity to sell the customer on why they should pick you over the next guy, even if you’re set at a higher price point.
The best estimates I’ve seen are embedded into full proposals.
These proposals give you an opportunity to include a lot of information that demonstrates to your customer that you’re the right choice. Including:
This is probably the single biggest mistake I see service businesses make. Not following up on your estimates.
Follow up. Follow up. Follow up. If you’re not following up, you’re losing deals you’d easily win.
I can give you plenty of different scenarios where a follow up can win your deal, but most of the time it will come down to a few main reasons that a follow up won your deal.
Sometimes people need a nudge or reminder to get them in motion; it’s just human nature.
The average customer has a negative bias on the pricing of labor and services from service businesses. In my opinion, this is the #1 obstacle to higher profit margins that service businesses deserve.
The average consumer simply doesn’t understand the true operating costs of a business, nor the inputs needed to learn the expertise required to do the job. To add to this, they also don’t realize that service business labor is typically not billable for full 40 hour work weeks.
Because of this, your customers will often have sticker shock if you show them the labor rates you charge in your work (or should be charging).
I advocate that you not to separate out your labor in your estimates. It just gives the customer something to pick on and try to compare to 40 hour per week jobs. The other problem with breaking out your estimate in too much detail is that customers start to nitpick.
Does that mean I shouldn’t include any detail and just a price? No, not at all. You need to demonstrate all work, costs, and most importantly, expertise in your estimates.
One of the things I see service businesses struggle with the most is showcasing exactly what makes them better than their competitors. And when they can’t demonstrate what makes them better, they fall back to cutting pricing to win deals, which is a race to the bottom and a really bad practice.
Many service business owners and contractors believe their work quality is their differentiation. That may be true, but how does the customer know this? And what does the difference in work quality mean for them? This is where most stumble.
If your differentiation is your work quality, you need to learn how to showcase that your work quality is superior to others. Depending on what you do, it can be extremely difficult to do in practice. Not only do customers often not know what quality work looks like, but it’s really hard to show to the customer.
So what can you do instead? Demonstrate your expertise and showcase the steps that go into making your work quality superior.
What do you do and what steps do you take to make sure your work is high quality? What steps do you take that your competitors may take shortcuts in? Walk your customers through your process and, most importantly, what you look out for based on your experience.
Customers love knowing that you know what issues to look out for and avoid. To many customers, quality work equates to no problems for them. This will earn you enormous trust in quality.
And let me tell you a secret… even simply explaining the most elementary steps in how you perform your work, even steps that literally everyone does, can build trust. Why?
Because the reality is that the average consumer knows very little about what you do.
Customers sometimes can’t tell the difference between high quality work from poor, but you know what they can always tell? Reliability, timeliness, and communication.
Nothing can kill a deal as quickly as poor reliability and communication. In fact, customers value reliability and strong communication so highly that it will oftentimes win the deal for you. And in some cases, simply being the first to turn around an estimate to a customer and meet their needs can win the deal.
As they say, “time kills deals.” It’s very true for multiple reasons, and that’s why it’s important to get your bid in quickly to capitalize on momentum.
It’s also why I advocate for on-the-spot pricing and estimates. Not only are you obviously providing a super quick turnaround on your estimate, but it gives you the opportunity to handle objections in person and make adjustments as needed.
Learn how to easily implement sales best practices in your estimates and proposals with FieldPulse
