Business quoting: 10 secret line items revealed

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.

Before I get going, a HUGE thank you to everyone who is coming along to Flying Solo LIVE! in Sydney this Wednesday. The event sold out last week and needless to say we're thrilled at the level of interest and support it's received. Stay tuned for news of more events down the track.

Now where were we? 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 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 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 quoting, you could try these articles:

Until next week.

Love your work,

Peter Crocker is a director of Flying Solo responsible for the areas of marketing and advertising. He is a business copywriter specialising in websites, videos and marketing communications.

24 comments | Add your own 1 2 3 4 | Next» View all»

Rarely these days but is has happened - I deal with a client who I feel is not going to pay me - and I give them a bare bones prices, just to extract some compensation out of them. Though I tend to avoid 'deliverable' quotes as scope creep is a real problem. I prefer to bill by the hour, and every time the client changes what they want, the bill reflects that. Heather Smith from Camp Hill | Read my articles
Wow, excellent article, peter, and spot on! I do all of the above, lol. I'm going to add my invoice tip to this... when discounting, always submit your invoice with full price, then add items with "no charge", or "discount 10%", etc. If you don't do this, the client will never know you gave them a deal. Often there are little things that take no time that you can include at "no charge". I try to make sure there is at least one item at "no charge" on my invoices every time. It goes down well! Melinda Kelf from Port Macquarie
When I first started consulting and clients would ask for a fixed quote or an expectation of time to complete, I would do as accurate a prediction as I could. However, like so many things quoted in advance, I always seemed to be out - usually down on actual. This either cost me financially, or gave clients an unrealistic expectation.
A friend told me to do my best calculations of reality, and then multiply by Pi. I laughed originally, but then tried it. It was amazingly accurate: most projects blow out by Pi (or near enough to it, that makes no difference). So now, even though I prefer to work on time and materials, I am quite confident that when I give an estimated cost or estimated time for a complex project, we are usually very accurate. I don't have to add that "Just in case blow out happens charge". This means I don't lose out financially, and our clients' expectations are managed realistically.
By the way: I also use this approach for quotes I am given. Usually by trades people, and always on the times for expected completion. Multiply by Pi and you get a more realistic result. Suzanne Butz from Australia
Finally, a sensible use for Pi !! At least it's one that I understand! Bev Ryan from Brisbane
Then there is the add on for clients who are known for always taking too long to pay, despite their stated 30 day policy. Denise from Darwin
With the marketing coaching side of our business we use "value based" pricing. Instead of per hour it is the total fee and what they get for it (value) as well as the expected outcomes. It seems to work well. Susan Oakes from Sydney

24 comments | Add your own 1 2 3 4 | Next» View all»

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