When you meet with a customer do you submit a bid or an estimate?
Dictionary.com defines Estimate as “an approximate judgment or opinion”. Basically an Estimate is a guess. You’re saying, ‘Hey, it’s probably going to cost about this much’. So half way through the job you are going back to your customer asking them for more money because you guessed.
I prefer to bid my work. Dictionary.com defines Bid as “to offer as the price one will charge”. See how confident that definition is? A bid is based on facts. It’s the sum of all the expenses a job will incur plus overhead and profit.
A week or so ago I was accidentally copied on an email that was sent out from one of my customers to another vendor. From reading the email I could tell that this other vendor had gone back to the customer and requested more money to complete a job. This happened because the vendor had misunderstood the requirements of the job. The customer was very irritated at the request.
Now, I don’t know if this vendor submitted a Bid or an Estimate but I can tell you that the customer was expecting a bid. Customers aren’t expecting you to guess at their work. They are expecting you to know what you are going to charge them. They are expecting an expert.
Experts create Bids, not Estimates.
I can’t stand estimates. Every time I hear someone give me an estimate I cringe because I know that the final bill is always going to be higher than what they estimated it was going to be.
Experts create bids. That is so true. When someone gives me a bid my confidence goes way up. I feel like I’m truly talking to someone who knows what their doing.
Great distinction James!
How would anyone like it if then went into Wal-Mart to go shopping and all the prices had a +/- sign in front of them.
“It will be $14.99 give or take.”
The best thing about a bid compared to an estimate is that the customer knows you assume the risk of cost or time overruns. This is the same issue that many service companies face when they bill on a per-hour basis. Clients don’t always know if those extra hours were really needed or just a way to add more revenue.
Confident business professionals who understand their businesses can submit fixed prices because they know what it will take to do the job and what value they are providing to their customers/clients.
So very accurate!
When I look back on my experience with IPA (consulting company) I really feel taken advantage of. I should have had them quote me an exact price with an understood deliverable. As it turned out I feel like they rammed an extra week down my throat just for the revenue.
I refuse to ever do that to someone else.
I will deliver X to you for X price. You can eliminate risk for your customers this way.
If you don’t want an estimate, don’t ask for one. If you want a bid then sign a contract. Then be prepared to pay more for the whole thing so that the attorneys can look it over. Like it or not, there are unknowns in everything we do.
Thanks for adding your thoughts, Larry!