B104.4 - Sales Quotes |
Sales people generally like sales quotes. When you get to quoting, it means you've got the potential to make a sale, and if you make a sale as a sales person, often times your job is mostly done. Unfortunately, when you are a Sole Practitioner or a Solopreneur, often times that closing is just the beginning of a longer, more tedious fulfillment or rendering process.
There are numerous types of quotes and ways to quote:
There are numerous types of quotes and ways to quote:
- Public quoting via the posting of pricing in public spaces or on the Internet
- Verbal Quotes
- Written Quotes - Informal - Without a Quoting System
- Written Quotes - Formal - Without a Quoting System
- Written Quotes - Formal - Generated from a Computer System with fixed pricing
- Written Quotes - Formal - Generated from a Computer System with custom pricing
- Comment - List Price, Multipliers and Complexity
- Summary
1) Public Quoting via the posting of pricing in public spaces or on the Internet
Have you ever gone to a website or into a business and had an interest in a product or service, but had no way to passively gain an idea of pricing? Some find that to be incredibly frustrating. It seems to be less common these days, and that shifting trend is music to some ears. In times past, often times the goal of all people in sales was to get names and numbers and one way to do that was to force personal interaction when expressing interest in something like pricing.
There are strategies associated with not posting pricing, but this day in age, you may be pushing more folks away than you think. This is a personal alignment thing more so than right or wrong thing.
If your pricing varies, give a range... give a ball park. Here's an example of some gross pricing publicized on awebsite for vacation rentals. It gives the owner the opportunity and power to negotiate, but it also weeds out folks looking for a ridiculous deal.
2 nights -- $275-450/night (based on occupancy, events and timing)
3 nights -- $250-400/night (based on occupancy, events and timing)
4-6 nights -- $250-350/night (based on occupancy, events and timing)
7 nights -- $250-275/night (that is 1750+/week based on occupancy, events and timing)
> 7 nights is a custom quote
-- a few exceptions to above pricing apply
-- exceptional deals for > 7 day stays from December through March
-- 2 or 3 NIGHT MINIMUM --
Typically 3 Night minimum, but will consider 2 nights depending on time of year and existing bookings.
-- CLEANING FEE --
The cleaning fee is $150.
There are strategies associated with not posting pricing, but this day in age, you may be pushing more folks away than you think. This is a personal alignment thing more so than right or wrong thing.
If your pricing varies, give a range... give a ball park. Here's an example of some gross pricing publicized on awebsite for vacation rentals. It gives the owner the opportunity and power to negotiate, but it also weeds out folks looking for a ridiculous deal.
2 nights -- $275-450/night (based on occupancy, events and timing)
3 nights -- $250-400/night (based on occupancy, events and timing)
4-6 nights -- $250-350/night (based on occupancy, events and timing)
7 nights -- $250-275/night (that is 1750+/week based on occupancy, events and timing)
> 7 nights is a custom quote
-- a few exceptions to above pricing apply
-- exceptional deals for > 7 day stays from December through March
-- 2 or 3 NIGHT MINIMUM --
Typically 3 Night minimum, but will consider 2 nights depending on time of year and existing bookings.
-- CLEANING FEE --
The cleaning fee is $150.
2) Verbal Quotes
Everyone should know or realize that verbal quotes can be problematic. The number of ways they can backfire on folks is numerous.
There are a few situations in which I verbal quoting can be an exceptionally great tool:
There are a few situations in which I verbal quoting can be an exceptionally great tool:
- Very quick qualification/disqualification process -- Use them to quickly qualify a job. If someone called and said, "I want to redo my full bathroom, can you come look at it.". A first response might be, "My full bath redo's start at $15,000 and they can go as high as you'd like but most jobs I take on seem to end in the $20,000 to $30,000 range. Is that the ballpark you were thinking/expecting?".
Within 30 seconds I've qualified someone. Many contractors will NOT do this because they like the opportunity to build report with new customers, and the want the opportunity to check out other opportunities on jobs. This technique of verbal quoting is a good fit for some and not for others. - Ballpark Quoting -- This is much like the qualification/disqualification process above, but it's less about qualifying or disqualifying and more about convey generalities quickly. If someone wants an idea on pricing, and it's not easy to provide in a few seconds, toss out a low and high range and ask them if that is specific enough for their needs. If you are a detail oriented person or a math person, this may not seem natural or appropriate to you, when in fact this is all many folks need many times to make whatever decision it is they need to make. Test the waters before spending more time on details that are irrelevant to the inquiry.
- Business among trusted Resources -- There was one lumber vendor who still did all business the old fashioned way... verbal quoting, verbal orders, by phone. That is also the way in which much steel purchasing still transpires today too, believe it or not. The speed with which you can do business with verbal quotes and orders is shocking, and the lack of screw ups is amazing when working with someone who is skilled in doing business that way. It is much like working with a very good waiter or waitress. Confusions occur, but if you are working with a trusted resource, you just work them out. This goes back to that advice an Attorney gave that was shared in the legal section. You should only partner (or do business with) someone that you could do business with verbally. If you have to write it down to protect yourself if something goes wrong, it may not be as easy to rectify as one might think.
3) Written Quotes - Informal - Without a Quoting System
Email is an exceptional way to do all business dialogue. Having written documentation of conversation more for memory reasons than legality is exceptional and transparent. As long as all quoted information is clearly laid out in paragraph or list form in an email or a letter or a note in some form, most people are satisfied with the information. They may ask for a formal invoice upon payment for a receipt, but for reaching general consensus on the transaction, text is fine.
Example of an informal quote sent via email for vacation rental business regularly. (quotes are here so it
Example of an informal quote sent via email for vacation rental business regularly. (quotes are here so it
=====================
Hi xxx --
Thanks for the email. I currently have availability for the days requested in unit 1.
Your rate for up to 6 for 7 nights is $250/night, plus a $150 cleaning fee and $350 refundable damage deposit. This pricing includes all taxes and fees. 50% of rental amount plus cleaning fee and damage deposit due at time of reservation, and balance of rental amount due 30 days prior to arrival.
Thanks
Ray
=====================
Hi xxx --
Thanks for the email. I currently have availability for the days requested in unit 1.
Your rate for up to 6 for 7 nights is $250/night, plus a $150 cleaning fee and $350 refundable damage deposit. This pricing includes all taxes and fees. 50% of rental amount plus cleaning fee and damage deposit due at time of reservation, and balance of rental amount due 30 days prior to arrival.
Thanks
Ray
=====================
$20-50,000 contracting jobs have been quoted in a very similar manner, just with a little more detail and possibly with the use of bullets. And $5-10 transactions the same way.
If you don't have a sales background or a background in Bartending or some other job where informal pricing was used, it may not feel natural. Formal Quoting takes a little more time so only do it if it is needed.
Advantages: You can be very flexible on pricing, adjusting for all kinds of variations as appropriate. It's fast and efficient.
Drawbacks: The drawbacks of this type of system is an inability to quickly view a list of quotes for tracking purposes and for tracking individual pricing of items quoted. Spreadsheets or a database could be setup to track that info if desired. It would add a recording step to the origination process.
If you don't have a sales background or a background in Bartending or some other job where informal pricing was used, it may not feel natural. Formal Quoting takes a little more time so only do it if it is needed.
Advantages: You can be very flexible on pricing, adjusting for all kinds of variations as appropriate. It's fast and efficient.
Drawbacks: The drawbacks of this type of system is an inability to quickly view a list of quotes for tracking purposes and for tracking individual pricing of items quoted. Spreadsheets or a database could be setup to track that info if desired. It would add a recording step to the origination process.
4) Written Quotes - Formal - Without a Quoting System
The general information in a formal written quote without a quoting system is the same as above. The primary difference is generally as follows:
Working for a multi-national industrial component provider in the 1990s, it was shocking to realize the formal looking quotes they were generating were in fact just the result of Microsoft Word and Microsoft Excel Documents.
The quote numbers were manually created as a function of date, ,customer or person quoting, or a paper quote log. The quotes were either emailed or faxed and then they were either stored as paper copies or stored on a network drive for future reference. The simplicity of the system was surprising.
Formal quotes do not have to be digital. Home Improvement contractors, like flooring re-finishers for example, are notorious for showing up with a clipboard and some forms in duplicate, and they measure the space, talk with you about options and then write up the quote on the spot, by hand. They then tear off your copy and they've completed the formal quote process by hand.
With the advent of GDocs and Gsheets by Google and a Chromebook, the ability to create Formal Written Quotes, without a quoting system and making them available to all who need access to them is amazing, and it is better than just doing them in a MS Word or Excel and posting to a network drive for a plethora of reasons. GSuite for this type of quoting is revolutionary for this type of quoting.
With a digital system, one does need to come up with systems for quote revisions (create copies and revise or revise originals and note changes) but generally speaking, the GSuite setup is a great system for this type of quoting.
Advantages: The Advantages are generally the same as with the informal quotes. You can be very flexible on pricing, adjusting for all kinds of variations as appropriate. It's fast and efficient, but it is not typically as fast as the informal quoting. One advantage is that anyone that does this typically also then stores the info for easy retrieval, so in that sense, it's typically a more organized system naturally.
Drawbacks: The Drawbacks are generally the same as with the informal quotes. The inability to quickly view a list of quotes for tracking purposes and for tracking individual pricing of items quoted. Spreadsheets or a database could be setup to track that info if desired. It would add a recording step to the origination process.
- It's on a form that looks like a quote
- There is typically a quote number or reference number of some sort
- The totals or total ranges are calculated
- There may be a line to sign to accept the quote or there are instructions indicating the process of accepting the quote
Working for a multi-national industrial component provider in the 1990s, it was shocking to realize the formal looking quotes they were generating were in fact just the result of Microsoft Word and Microsoft Excel Documents.
The quote numbers were manually created as a function of date, ,customer or person quoting, or a paper quote log. The quotes were either emailed or faxed and then they were either stored as paper copies or stored on a network drive for future reference. The simplicity of the system was surprising.
Formal quotes do not have to be digital. Home Improvement contractors, like flooring re-finishers for example, are notorious for showing up with a clipboard and some forms in duplicate, and they measure the space, talk with you about options and then write up the quote on the spot, by hand. They then tear off your copy and they've completed the formal quote process by hand.
With the advent of GDocs and Gsheets by Google and a Chromebook, the ability to create Formal Written Quotes, without a quoting system and making them available to all who need access to them is amazing, and it is better than just doing them in a MS Word or Excel and posting to a network drive for a plethora of reasons. GSuite for this type of quoting is revolutionary for this type of quoting.
With a digital system, one does need to come up with systems for quote revisions (create copies and revise or revise originals and note changes) but generally speaking, the GSuite setup is a great system for this type of quoting.
Advantages: The Advantages are generally the same as with the informal quotes. You can be very flexible on pricing, adjusting for all kinds of variations as appropriate. It's fast and efficient, but it is not typically as fast as the informal quoting. One advantage is that anyone that does this typically also then stores the info for easy retrieval, so in that sense, it's typically a more organized system naturally.
Drawbacks: The Drawbacks are generally the same as with the informal quotes. The inability to quickly view a list of quotes for tracking purposes and for tracking individual pricing of items quoted. Spreadsheets or a database could be setup to track that info if desired. It would add a recording step to the origination process.
5) Written Quotes - Formal - Generated from a Computer System w/ fixed pricing
A website with a shopping cart is a prime example of this type of system. That qualifies as public pricing system as discussed in item 1, but it is the same concept.
Items are selected, quantities are selected, pricing for various quantities are populated, and totals are calculated. The quote can be printed and mailed, faxed, emailed, or shared digitally via a link or in some other manner.
Discounts can typically be applied to the entire order with such a system.
Advantages: You can do all kinds of things to track quotes and sales funnels.
Drawbacks: Expensive/More time consuming to setup and maintain. Difficult to discount individual items without a line item level override system. An accident made in entering pricing into the system could affect multiple orders.
Items are selected, quantities are selected, pricing for various quantities are populated, and totals are calculated. The quote can be printed and mailed, faxed, emailed, or shared digitally via a link or in some other manner.
Discounts can typically be applied to the entire order with such a system.
Advantages: You can do all kinds of things to track quotes and sales funnels.
Drawbacks: Expensive/More time consuming to setup and maintain. Difficult to discount individual items without a line item level override system. An accident made in entering pricing into the system could affect multiple orders.
6) Written Quotes - Formal - Generated from a Computer System w/ variable pricing
This is the Cadillac of quoting systems. A custom database system is preferred/required.
List pricing is typically entered along with customer multipliers or discounts OR unique customer pricing is entered in a customer master area.
These are typically very complex systems. Complex systems are not inexpensive to create or maintain.
As with the section above, items are selected, quantities are selected, pricing for various quantities are populated (with proper discounts, multipliers or override capabilities) and totals are calculated. The quote can be printed and mailed, faxed, emailed, or shared digitally via a link or in some other manner.
Advantages: You can do all kinds of things to track quotes and sales funnels. Easy to discount individual items without a line item level override system.
Drawbacks: Expensive/More time consuming to setup and maintain. An accident made in entering pricing into the system could affect multiple orders. The flexibility that comes with being able to manipulate pricing has some risks associated with employees under pricing (or over pricing) items for one reason or another.
List pricing is typically entered along with customer multipliers or discounts OR unique customer pricing is entered in a customer master area.
These are typically very complex systems. Complex systems are not inexpensive to create or maintain.
As with the section above, items are selected, quantities are selected, pricing for various quantities are populated (with proper discounts, multipliers or override capabilities) and totals are calculated. The quote can be printed and mailed, faxed, emailed, or shared digitally via a link or in some other manner.
Advantages: You can do all kinds of things to track quotes and sales funnels. Easy to discount individual items without a line item level override system.
Drawbacks: Expensive/More time consuming to setup and maintain. An accident made in entering pricing into the system could affect multiple orders. The flexibility that comes with being able to manipulate pricing has some risks associated with employees under pricing (or over pricing) items for one reason or another.
7) Comment - List Price, Multipliers and Complexity
The most common way to implement tiered pricing for clients is with a list price sheet. The pricing on such a sheet is only relevant in a relational perspective to other items and not an absolute perspective.
Discounts -- Discounts are then applied to pricing to get customer pricing. For example, all customers may buy at list price or at a 10% discount to list, but then some customers may buy at 20% or 30% discount and their standard discount rate is stored somewhere.
Multipliers -- Multipliers are just like discounts, except instead of reducing by a %, you are multiplying by a % (which just makes for one less math step). So a 10% discount is a .9 multiplier. A 30% discount is a .7 multiplier.
To give you an idea of how strange profit, margins and multipliers can get in a multi-national, industrial setting, when working at the bearing company most of our customers bought at somewhere between a .5 and .8 multiplier. We were told our costs were often in the .25 to .4 range. Then one day a customer who was a multi-national corporation, and a favorite customer of our Parent Company overseas asked for US pricing. They were both German companies. They wanted the account serviced stateside even though the sales person was not getting credit for the sales. That's when the sales person found out they were buying directly from our parent company at something like a .25 multiplier (so they were buying directly from the parent company of the US subsidiary for less than the subsidiary was supposedly buying at for resale purposes in the states. It made for interesting conversations, and that is about the time when the sales person realized the Germans and Europeans in general were eating the lunch of the North Americans, much like the North Americans were eating the lunch of the Chinese. The Europeans have a socialist system right? Except they are in fact some of the biggest and most well practiced capitalists on the planet. The multi-national pricing systems with various distribution channels can get very, very complex.
Discounts -- Discounts are then applied to pricing to get customer pricing. For example, all customers may buy at list price or at a 10% discount to list, but then some customers may buy at 20% or 30% discount and their standard discount rate is stored somewhere.
Multipliers -- Multipliers are just like discounts, except instead of reducing by a %, you are multiplying by a % (which just makes for one less math step). So a 10% discount is a .9 multiplier. A 30% discount is a .7 multiplier.
To give you an idea of how strange profit, margins and multipliers can get in a multi-national, industrial setting, when working at the bearing company most of our customers bought at somewhere between a .5 and .8 multiplier. We were told our costs were often in the .25 to .4 range. Then one day a customer who was a multi-national corporation, and a favorite customer of our Parent Company overseas asked for US pricing. They were both German companies. They wanted the account serviced stateside even though the sales person was not getting credit for the sales. That's when the sales person found out they were buying directly from our parent company at something like a .25 multiplier (so they were buying directly from the parent company of the US subsidiary for less than the subsidiary was supposedly buying at for resale purposes in the states. It made for interesting conversations, and that is about the time when the sales person realized the Germans and Europeans in general were eating the lunch of the North Americans, much like the North Americans were eating the lunch of the Chinese. The Europeans have a socialist system right? Except they are in fact some of the biggest and most well practiced capitalists on the planet. The multi-national pricing systems with various distribution channels can get very, very complex.
8) Comment - Healthcare and Wellness Quoting
One of the most unethical quoting systems running industry wide right now is related to our health care and wellness providers. Have you ever tried to call a doctor, dentist or other wellness provider who deal in both cash and insurance and get a quote for a procedure? Good luck with that...
Here's what is going on.
Over-reimbursement -- In many cases, Health Care companies are reimbursing MORE money for a procedure than a Doctor would feel comfortable charging a patient. Basically, their mentality is that if the insurance company is willing to pay the premium we should not leave any money on the table. The problems with this are 1) The Providers are profiting at a hidden expense to the consumer and 2) they can NOT have a conversation with their patient about pricing without exposing their greed.
Under-reimbursement -- In some cases, Health Care companies are reimbursing LESS money for a procedure than a doctor would feel comfortable charging a patient. This was in fact the "intended orientation" of insurance billing because the doctors were to view the reduction as a marketing fee for being listed as a participating provider in a network or system. In this case, doctors should openly post their pricing for all to see, but they typically don't because often times they have some Insurance Carriers over-reimbursing and others under-reimbursing and they will refuse to post pricing to protect, their greedy secret.
Here's what is going on.
Over-reimbursement -- In many cases, Health Care companies are reimbursing MORE money for a procedure than a Doctor would feel comfortable charging a patient. Basically, their mentality is that if the insurance company is willing to pay the premium we should not leave any money on the table. The problems with this are 1) The Providers are profiting at a hidden expense to the consumer and 2) they can NOT have a conversation with their patient about pricing without exposing their greed.
Under-reimbursement -- In some cases, Health Care companies are reimbursing LESS money for a procedure than a doctor would feel comfortable charging a patient. This was in fact the "intended orientation" of insurance billing because the doctors were to view the reduction as a marketing fee for being listed as a participating provider in a network or system. In this case, doctors should openly post their pricing for all to see, but they typically don't because often times they have some Insurance Carriers over-reimbursing and others under-reimbursing and they will refuse to post pricing to protect, their greedy secret.
Summary
Pick a quoting system that makes sense for your needs. Recognize they all have advantages and disadvantages. Always build in ways for special deals or discounts with or without authorization, if appropriate. If you don't, you will regret it because there will always be times when you will want/need to discount things for some reason or another.