Preparing a Quotation in 5 Easy Steps

A good quotation will help a business collect a tidy profit on a job and keep their customer happy. Here’s how to put together a quote that is both accurate and professional.

For anyone in the field service industry, the ability to prepare quotations is fundamental to the job. In fact, sometimes it seems like all your time is spent creating quotations, filling out work orders, or following up on invoices.

But not everyone does quotations correctly, and as a result, some businesses struggle with profiting off of jobs or have unpleasant interactions with customers who object to a significant deviation from the quote during the job. Quotations should not be rushed -- they take hard work and practice to master.

If you’re wondering how to perfect your quotation process, this guide will give you some ideas on how to improve the professionalism and accuracy of your quotes.

Overview: What is a quotation?

In the field service industry, a quotation is a document that a seller provides to a potential customer that lists what services will be provided and what the estimated price will be. The document is provided before the customer makes a purchase in order to show the customer a breakdown of what they will get and for what price.

The final cost of the job may differ from the quotation if unforeseen factors arise, such as an increase in the cost of materials, a delayed shipment, or additional work requested by the client. A quotation typically includes a price breakdown, details of the deliverable, and a timeline, if required.

How to prepare a quotation for your work

When you provide a quote to your customer, you are telling them what you intend to do, how you intend to do it, and how much it will cost. Therefore, an official quote should be well-prepared and researched. Here is how to prepare a proper quotation for your next job.

1. Assess client needs

Get extensive details from the customer on exactly what the client requires -- the more detail, the better. Consult with them on their approach and tell them what you can and can’t do. Get input from your internal team and look at previous solutions provided to clients with similar needs. Then, formulate a tailored solution that ensures all parameters are met.

2. Evaluate capacity

Even if you understand what the customer needs, that doesn’t mean you should promise them the sun and the moon. Evaluate your own capacity and honestly assess your ability to perform to the customer’s expectations. In business, one should always underpromise and overdeliver.

Look at your current workflow and make realistic estimates on when you could complete items, and if you wouldn’t be able to realistically complete a key task, be upfront with the customer on that.

3. Outline service provided

With client needs understood and capacity evaluated, it’s time to start putting together the document. Outline what service your company will provide. Be detailed and describe exactly what your client can expect to happen and when. Be highly transparent and itemize services provided. Describe precise hours, outline costs, and list any potential risks that could cause the cost or schedule of the project to balloon.

4. Outline terms and conditions

Your quote should generally be a fixed price, but it should be open to flexibility depending on what happens over the course of the product, so outline the terms and conditions so you and the client are on the same page. Account for any variations and external circumstances that could impact the project, and describe the conditions if additional work is required.

5. Special notes

You now have a basic quotation, but you can go a step further with some special notes, depending on the project. This may include timelines, a completion date, payment terms, or even a summary of the project scope. It’s up to you. A quotation is your way of communicating with your client, so create one that is tailored to your relationship.

How to properly price your quotation

We've gone over how to put together the document, but how can you be sure your quoted price is accurate? Learning how to write a price quote is tricky, but ultimately it comes down to a few simple steps.

1. Do your homework

You must adequately research the project to determine what kind of price you can offer. Ideally, it should cover all of your costs and leave some profit at the end, so if you get it wrong, you may lose out on those profits. Research the marketplace and learn what customers will generally pay, and then research past jobs of your own to determine how much such a project typically costs you to perform.

2. Select a price technique

Next, you’ll want to determine what kind of pricing you want to go with. You’ll need to figure out which technique you want to go with before coming up with an estimate, as they involve different research.

• Value-based pricing: This strategy involves setting a price based on the perceived or estimated value of your service from the customer's standpoint, rather than basing it on how much it costs you.
• Cost-plus pricing: This pricing method involves estimating how much the work would cost you to perform in terms of materials and man-hours, and then adds a mark-up percentage.

3. Cover all your costs

You’re in business to make money, so don’t agree to lose money. Ensure the estimate covers all of your costs and leaves some left over. If the customer isn’t willing to pay your estimate, let them walk -- don’t take the job in the hopes that you can beat the estimate. Identify a break-even and profit point so you can be confident that this is a profitable job to take.

4. Consider variables

Don’t forget other variables that affect your final costs, like taxes, state and local fees and permits, differing pricing based on locality, distribution costs, and the like. Again, it’s always wise to go back to past projects and look for costs you didn’t think of that commonly show up when you go on service calls.

5. Be vigilant

Just because you nailed one quote doesn’t mean you’ll be equally successful the next time. Don’t rest on your laurels -- constantly monitor market conditions and adjust your quotes accordingly. Watch the competition and note how customer demands change. Consults with customers regularly to be sure you understand how to price competitively.

5 best practices when preparing a quotation

That’s most of what you need to know about preparing a quotation, but here are five tips to help you fine-tune the quotation to perfection.

1. Make it user-friendly

Quotations don’t feel like marketing, but they are in a way. First impressions matter, so create a concise and attractive document that is easy to follow. Ensure the pricing breakdown is clear, and that everything seems to line up. If a quote immediately makes sense to your customer, it increases the chances they’ll agree to it straight away.

2. Professionalism

Customers expect you to be professional, even if you’re just a guy with a truck. If you don’t know how to write an invoice, get some software and learn to do it professionally.

Remember that this is essentially a contract, so you can’t just print up a quick estimate and shrug your shoulders if things change -- your customers expect you to adhere to it. Not only does precision result in a better relationship with your customer, but it also mitigates your legal risk.

3. Details matter

Leave nothing out of your quotation, within reason. Include all business contact information, timelines, delivery dates, payment schedule, taxes, terms and conditions, and everything else you can think of. The more information you include, the less likely you’ll have different expectations than your client, which is a relationship killer.

4. Focus on value, not just price

Be careful with pricing -- don’t just make it a race to the bottom. It could cheapen the customer’s perception of your service and cause you to take jobs that aren’t profitable. Instead, focus more on communicating value and transparency. Let the customer know through your quotation that while they may find a better price, they can trust you’ll get the job done accurately and professionally.

5. Provide incentives

Instead of trying to beat the competition on price, try including other incentives in the quote to entice the customer. You might offer special discounts, additional work at no extra cost, or any other extras you can think of. Study previous rejected quotes and compare them to quotes that were successful to get ideas on how you can do this.

Use software to increase your professionalism

If you’ve been using spreadsheets or a word processor to create your quotations, now is the time to ditch them for field service management software. This software will help you create professional-looking quotes that will impress your client.

Because the software is integrated with your operations, it will also make it easier to create more accurate estimates. This software will help you with many other things in your business, like accounting, technician scheduling, and much more.