How to Create Proposals Faster
For many companies needing to price projects or smaller jobs, the surest way to slow down the proposal process is to require multiple management approvals for every customer bid.
I was impressed that the repair quote I requested that morning landed in my inbox two hours later.
But I wanted a second quote to ensure I wasn't overcharged.
Well, that quote didn't come that quickly.
So, I followed up with the sales rep. It took another day before I received a price, which, to my surprise, was just a lump sum and didn't provide a breakdown like the other company. It seemed rushed. As the price was also higher, we chose the first, less expensive offer.
It always amazes me how long established companies that regularly provide price estimates take to respond to a customer requesting a quote. It shouldn't take days, for sure.
Adding Approvers Is No Replacement for a Project Pricing Model
For many companies needing to price projects or smaller jobs, the surest way to slow down the proposal process is to require multiple management approvals for every customer bid. The approver is at lunch, in a meeting, or on a business trip — these are common reasons delaying an offer. An overworked sales rep can, of course, be another reason.
But why do multiple managers need to approve a routine proposal?
For car dealers, it prevents sales reps from unnecessarily lowering a vehicle's price to win a contract from pushy customers because they can blame their manager for not allowing it. The "good cop, bad cop" strategy successfully counters negotiation-savvy car buyers.
But in less haggling-intense industries, business owners often preemptively bring in approvers to compensate for missing pricing models, believing that a second pair of eyes would prevent a job from being underpriced.
However, I haven't seen it often that an approver rejects an offer. The reason is simple: They are already late in getting the proposal to the customer and are afraid of losing the contract to a competitor if they rework it.
The Job Often Goes to the First to Respond: Responding to inquiries consistently in a short timeframe requires more than will. It requires a secret enabler in the background: a digitized workflow.
Use Standardized Components to Calculate a Price and Estimate Your Costs
I frequently hear that every project is different, and that's why pricing models don't work.
In my experience, that's not the case. Although projects can look very different at first glance, they often consist of similar components that differ only in size.
Take an exterior paint job as an example. Usually, a house's surface area, the number of coats, and the paint quality largely determine the price. Once you know these three factors, you can deal with the exceptions, such as whether you can use ladders or need scaffolding in the case of a multi-story house. After pricing these and other complications and adding a project contingency, you are done and can send the quote to the customer.
If you have been running your business for a long time, you should be able to quickly create these standardized components. You can easily test them by re-creating the last 20 or 30 proposals. Do you come to roughly the same price? If the gap consistently exceeds 10% in both directions, try to find a common reason for the deviation. Often, a missing component accounts for the difference.
Follow the same methodology to estimate your costs.
Create a Feedback Loop to Validate Your Pricing Model
For your pricing model to deliver reasonably accurate prices within only a few hours, you must keep track of your actual project costs.
For example, if you priced a paint job at $10,000 and estimated your costs at $7,000, you'll need to compare your actual expenses to that cost estimate. This feedback loop is crucial. Without it, you will never know whether your jobs are profitable or loss-making, or you will realize it too late when you run out of money. To avoid this dire scenario, you may need to upgrade your bookkeeping to get real-time visibility into your projects.
With this critical feedback loop in place, instead of adding approvers or micromanaging your sales rep, you can now rely on your pricing model to deliver winning proposals at astonishing speeds.
5 Reasons Why Knowing Your Profit Is Crucial for Your Company’s Success: Profit is the most straightforward metric that will bring financial transparency to your business and allow you to uncover long-hidden underperformance.
