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Michael Stone: Price Proposal Deadlines

There have been many times over my 60 plus years in construction where disruptions outside our control impacted the industry in negative ways. We’ve dealt with hurricanes, tornadoes and floods that caused material shortages and supply chain disruptions. We’ve weathered terrorist attacks and more than one election that’s caused uncertainty. I’ll admit a pandemic is new to me, but the problems it’s causing aren’t.

It was predicted over a year ago that we’d see cost increases, and sure enough, it’s happened in spades. We talked a few weeks ago about rapidly increasing material costs. Add to that the growing problem of finding dependable employees or specialty contractors to build your jobs, and you and your company are facing guaranteed cost increases to get your jobs built.

If you’ve been in the habit of giving quotes that are good for 30 days, or worse not putting any time limit on your quotes, you’ve probably already been bitten by cost increases.

This short and sweet article is a reminder to:

Not Give Free Estimates

If you’re still giving out free estimates, stop. Successful A list contractors only give out quotes after they have a firm commitment from their potential customers to move forward with the design and the job.

Time Limit Your Design Work

When you get a commitment, keep things moving along by putting a time limit on the planning and design work that needs to be done.

Some people have a tough time making decisions, which can make your job more difficult. Using good sales techniques and staying focused, you can keep the job moving forward in a timely matter. In today’s market, neither you nor your customer can afford to spend months completing the design.

Put a Deadline on Your Price Proposals

When you present a price to your prospective client, written up in the form of a proposal, make it valid for three days only. Not thirty days – three days. You don’t want them to come back to you in three weeks or three months and announce they’re ready to get started.

Of course, as we discussed in our previous article, you always need to include language in your proposal that covers material cost increases that can occur between when the proposal is signed and when you can start the job.

What if you have proposals that are still out there incubating? Send a letter stating that your proposal is no longer valid, and if they want to move forward to let you know so you can adjust your quote as needed.

With a three-day limit on a proposal, you’re also giving a potential client the incentive to sign the proposal today. You are giving them a reason to buy.

The advice I’m giving here isn’t just for a time like this. It’s the same advice I’ve given for years, but at a time like this you can see why it’s important. The truth is that we never know when the next disruption will occur.

Listen to the audio here, or select the dots on the right to download:

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