Show Notes

This is the episode where you realize that those of you in business who are selling a product are lucky!

In all seriousness, everything has its ups and downs.  One of the challenges with a service type business is accurate bidding of jobs.  This has many aspects to it, and I have not mastered any of them yet.  But, where one appendage is weak, another becomes strong to compensate for it.  So, if this makes any sense, I have become good at being bad at bidding.

Over the past several years of running my business, I have been asked to give a lot of bids or estimates on what it would cost to complete a particular job.  This is a very fair question from a prospective customer, and there are some very fair responses from you.

Some business types lend themselves to be easy to bid.  For example, with lawn care business you can come up with a metric that you can apply to any job.  Basically, you can figure out what you will charge to mow a 1/8 acre lawn, 1/4 acre lawn and 1 acre lawn, etc.  When you have a new customer call you, all you have to do is determine how large the lawn is and apply your metric to it.  Bam, you have an accurate bid.

This is possible in a situation like mowing lawns because there is only one variable to consider – the size of the lawn.  That variable is fixed, and therefore you can come up with a solid number.  But on the other end of the spectrum there are those jobs with several variables, and variables that are very difficult to measure.

My business falls into the latter category, and I suspect that many of yours will as well.  When this occurs, you might not ever be able to accurately assess variables.  What do you do when that is the case?  Well, that is what I have become good at doing.  Let’s start off by looking at some keys to bidding jobs well.

Keys to bidding:

• Take a good look at the entire job if at all possible
  • Do not extrapolate based on looking at a small portion of the job if you can help it
• Understand the nature of your business
  • Lawn mowing is pretty easy – fixed cost per acre
  • Gopher business is pretty difficult – depends on soil moisture, amount of gophers – can’t just say it costs “X” for this many acres
• Are you charging by the hour or the job?
  • I have not figured out how to charge a fixed rate in my business yet – I would like to.
  • Find a subset of the work you do that allows you to charge a flat fee for some of your jobs
• Have the confidence to charge enough to make money
  • A lack of confidence manifests itself in one of two ways
    • If you are bidding a flat rate job, you need to bid enough that you make money.
    • If you do not display confidence that your service is worth the money, the customer is less likely to accept the bid.
      • This is subconcious, and the customer will just have a bad feeling about it.
    • If you charge by the hour and you do not have confidence that the service you will be providing is worth the money, you might underestimate the hours needed to complete the job in order to get the sale.
      • If this happens you find yourself in the position of either working for less or charging more than you bid.
    • Neither of these outcomes is desirable.  It is a tricky situation.  Going over the bid can be explained and understood, but it is never what you want to happen.
• If you are not fully sure of how long it is going to take, then keep the customer in the loop and update them as the job is progressing.
• Or, set a cap on the job, and if you hit that cap then re-assess.
  • If the customer sets a cap, and you do not think you can finish the whole job within that amount, have them prioritize what is most important and start there.
• Explain to your customer what the variables are, and what might impact the bid you are giving them.

That is a quick list of bullet points that can help you do this well.  Since I have never been able to really give accurate bids on gopher extermination, I have had to concentrate on the lower portion of this list.  I have really developed my ability to work with the customer and mitigate the fact that I cannot give them a firm price in many cases.  When you do this honestly and ethically, all parties seem to be happy in the end.

Other Places You Can Listen To Us:

D&B Supply Show

LISTEN TO US ON SATELLITE RADIO! WE ARE CONTRIBUTORS TO “FFA TODAY” ON RURAL RADIO SIRIUS XM CHANNEL 147! “FFA Today” airs on Rural Radio Sirius XM Channel 147 Saturdays at 7:30 AM Eastern and Sundays at 6:30 PM Eastern. Please let RURAL RADIO know that you like hearing us on their channel!  Here is how to contact them and leave feedback: Email: zacht@rfdtv.com Website:  RuralRadio147.com Twitter: https://twitter.com/RURALRADIO147