I promised recently to talk about how to get paid for written quotes.
Today’s post will address larger jobs; later, I’ll talk about getting paid for repair quotes, when the home or building owner admits “my realtor asked me to get a written quote”, or “I need it for my insurance company”, or “I just need to see the roofing quote in writing so I can compare”.
First, don’t give your customers anything other than a verbal ballpark figure until they make a commitment to have you do at least the design work if not the whole job. This is outlined in our Profitable Sales book.
If the customer is ready to make a commitment, talk about either a design agreement or a letter of intent.
A design agreement allows you to work with the client to design the job, write the estimate, write the contract and present the whole package for their final consideration and signature. Price for a design agreement should be 4-8% of the estimated price of the job – when the final contract is signed for the job, the entire design agreement price may or may not be credited back to the customer at the contractor’s discretion. This issue should be covered in the design agreement.
A letter of intent simply holds a place on your production schedule so that you have time to work through the details of the plans the customer supplies or that you may be asked to draw, and you have compiled a firm price quotation for that work. Price for a letter of intent will be less than for a design agreement, again, credited back to the customer at the contractor’s discretion when the final contract is signed.
In either case, you have a commitment from the customer so that you are reasonably assured of getting the job when you have completed all the work necessary to get the project to the point of signing a contract.
I used to have the pleasure of regularly driving by a home with a large addition that was built by another contractor, using plans I drew and was never paid for. That was an expensive lesson. Always use a design agreement or letter of intent. If the customer isn’t willing to make a commitment you are probably wasting your time anyway.
The knowledge and experience Michael Stone gained in his 60+ years in construction has helped thousands of contractors improve their businesses and their lives. He is the author of the books Markup & Profit Revisited, Profitable Sales, and Estimating Construction Profitably, and is available for one-on-one consultations.