Business quoting: 10 secret line items revealed
by Peter Crocker
The world of big business is renowned for mysterious fees and charges. But here amongst small business, the use of hidden line items is running rampant! Here’s an exposé of the black art of business quoting.
When a quote comes in for $675+GST, it’s comforting to think that it’s worked out using some neat formula based on standard items such as labour, materials, product costs and a thin margin.
The price may have been arrived at that way, but more often than not business quoting also involves more than meets the eye.
Whether consciously or subconsciously, there are intangible factors that go into the black art of business quoting. Below are ten of the common ‘adjustments’ that are often factored in:
UP: The ‘unpleasant person’ price hike. Usually expressed in stronger language, this is the 20% tax added to the quotes of people who are an absolute nightmare to deal with.
DOWN: The ‘good bloke’ bonus. This is the lower price you give to a charming woman or man who is friendly and easy to work with.
UP: The ‘I’m too busy’ cost creep. If you’re in a period where you’re swamped with more work than you can handle, you’ll see small business quotes getting fatter.
DOWN: The ‘I need the work’ reduction. Got some spare capacity or saving for a holiday? Watch those quotes trim down a little to make sure you get the work.
UP: The ‘corporate’ tax. There’s something about knowing that a prospect just posted a two billion dollar profit that attracts a slightly higher quote.
DOWN: The ‘you’d look fantastic in my portfolio’ discount. Also known as the ‘Apple’ or ‘Celebrity’ bonus, you do these jobs for less so that you can impress your friends.
UP: The ‘some jobs too small’ slug. If you’ve ever had a huge bill for a tiny and seemingly simple job, you’ll have paid this tax.
DOWN: The ‘can I do all your work’ incentive. Applied to a customer that you know could send a lot of work your way if you can just get a foot in the door.
DOWN: The ‘this is just the tip of the iceberg’ discount. Given to fast-talking customers who convince you that once this small job is done there’ll be ‘stacks more’ work to come.
DOWN: The ‘that seems like too much’ write off. The extremely common last-minute reduction made to a quote that, despite your best calculations, just still seems higher than you think they’ll pay.
These secret line items are built into thousands of business quotes across Australia every day. But is it right or wrong? Do any hidden fees and charges go into your quotes? We’d love to hear your secrets and stories!
Meantime if you want some help with business quoting, you could try these articles:
- Price setting: How to decide what to charge
- Pricing strategies: Hourly rates? No thanks!
- How to deal with project scope creep