Question about quotes

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infused

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#21950 12-May-2008 08:54

Hi all,

Just wondering something about quoting. If I give someone a quote and it actually works out to cost me a lot more, am I stuck to that quote or can I charge more. Or is this something do discuss with the client?

Thanks

garvani

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#130143 12-May-2008 09:06

i regularly get charged more than ive been quoted.. mechanics are the worst for it!! Id generally talk to the client, people wont mind a slight increase, but it its going to be a blow out then you might have yourself an unhappy customer..

BobW

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#130148 12-May-2008 09:27

IANAL, but my understanding is that a quote is a binding offer while an estimate is a best guess. This is supported by the following information from the Commerce Commission site:

"A quote is an offer to do a job for a certain price. If accepted, then there is a contract for the work to be done for that price, unless the parties agree to a change in the price to cover extra work not covered by the original quote.

An estimate is the nearest price, or range of prices, that a business can give based on past experience. If there may be any significant variation from the estimated price, the business should make this, and the nature of the possible variation, very clear to the customer. All limits and conditions must be clearly spelled out. The business must make the estimate honestly, based on reasonable grounds.

It is good business practice to put quotes and estimates in writing, however, the Fair Trading Act makes no distinction between an oral or written quote or estimate. "
Source: http://www.comcom.govt.nz/FairTrading/TradePracticesCoveredbytheFairTradingAct/falseormisleadingpricing.aspx

In addition, the Consumer site adds a definition of how good an estimate should be (in the context of builders):
"There can be a big difference between an estimate and a quote. An estimate is only a best guess at what the job will cost and the builder is not bound by it. However, it is reasonable to expect it to be within 10 – 15% of the final cost. A quote is an explicit promise based on detailed specifications and is the price you pay, barring matters outside the builder’s reasonable control or increases in the cost of materials or labour (if the contract allows this), or other variations."
Source: http://www.consumerbuild.org.nz/publish/trades/tradespeople-tenders.php#gen3

infused

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#130150 12-May-2008 09:30

Thanks for that. Just what I was after.

Does anyone know if many computer companies quote of labour? I find it impossible... I'm always going over the time allocated.

nate

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#130196 12-May-2008 12:27

How has the quote cost you more? This is the sort of thing where your pricing needs to allow for changes in suppliers, fluctuations in currency etc.

Talk to your client and be honest - if you are reasonable with them, and the increase isn't too much (like it's double what you originally quoted) they should be fine with the change.

infused

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#130208 12-May-2008 12:53

It's not the hardware that is the problem quoting for, it's the labour. As an example, setting up a VPN for a client I put down as 2 hours as it is a fairly stright forward job. However, due to several unforseen problems, this took a bit longer.

nate

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#130216 12-May-2008 13:32

infused: It's not the hardware that is the problem quoting for, it's the labour. As an example, setting up a VPN for a client I put down as 2 hours as it is a fairly stright forward job. However, due to several unforseen problems, this took a bit longer.

Was the unforeseen problem your fault or the clients? If it was the clients, then explain to them the issue and why you need to bill. If it was yours, you'll probably have to meet them half-way, or the client may not agree at it - you'll then just have to grin and bear it.

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Fraktul

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#130233 12-May-2008 14:20

Yous should probably factor a percentage of jobs being over target and some under target based on your prior experience and then look at what you need to quote for from there.

I try keep the the maxium under promise and over deliver rather then over promise and under deliver.

mushion22

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#130273 12-May-2008 15:54

IANAL either, but I have been studying IT management incl ethics and law for the past few years. IMO, 3 ways you could go about it:

1) Make a conservative (ie sit on the side of caution) calculation of the hours it will take, and some times you'll take a little less, sometimes you'll take a little more time. Wear it.

2) Put extra effort into your quote wording. Be more detailed on the work to be carried out and put in the description of the system that the customer has given and make a quote based on their description, with a disclaimer where if the system is not as described it may require extra labour. This means that both you and the customer have made promises about the state of the system and the work that will be required and legally you can adjust your promise or refuse to follow through if they've broken theirs.

3) Make it clear that it is an estimate based on previous experience and that untill you have had a detailed examination of the system you cannot provide an accurate quote. Perhaps make clear upfront the kind of things that can lead to complications.

I would reccommend sticking to the less legalistic approach though - just choose your customers wisely if you can and form open agreements with them and show them in the long run that you are doing a good job for them rather than simply a quick job. Just visualise a Time - Cost - Quality triangle here. I am doing a bunch of research on business relationships, particularly in IT, at the moment and it tends to be that more successful relationships use contracts as a backstop rather than a guide in the long run especially when there is uncertainty (who realistically likes to end up in court or in arbitration? It's nicer just to solve problems pragmatically), and if you can have a more 'friendly' relationship it will tend to last longer and be more valuable - remember that keeping regular customers is cheaper than finding new ones.

Maybe you could do some kind of assessment before giving a quote, just like a mechanic would. But... just like cars there can often be complications with ICT - and at the end of the day you just need to make sure that you financially and legally secure yourself for those possibilities.

Kind of just one of those things - as you experience more you'll get to learn that IT jobs very often take longer than you expect because there are so many variables, and eventually you'll get a better idea of how long things take. It'd be nice to be able to charge a set price for vairous tasks but unless all the variables are under your control this will be very risky. I think bigger companies probably go the way of setting an average expected price - some jobs will take a bit longer and some will be a bit less, but they're doing so many that it evens out and they can increase the average charge if they start to see losses.

zocster

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#130277 12-May-2008 16:12

I have been doing a two step process, after talking to the customer and finding out the requirement, I would produce a quote first, and then before doing the actual job I will draw up a contract. It is particularly harder when it comes to web development where the client always want more.

mushion22

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#130281 12-May-2008 16:23

zocster: It is particularly harder when it comes to web development where the client always want more.

Change Management Clauses work a treat

.

Contracts are good for bigger jobs, but you wouldn't want to be drafting one for every small job. You could perhaps use a generic contract that includes a number of standard provisions I suppose. Contracts can also expose you to risk just in the same manner that they shelter you from it so be careful. A quote is essentially a simple contract.

Fraktul

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#130287 12-May-2008 16:56

mushion22:
zocster: It is particularly harder when it comes to web development where the client always want more.

Change Management Clauses work a treat .

Contracts are good for bigger jobs, but you wouldn't want to be drafting one for every small job. You could perhaps use a generic contract that includes a number of standard provisions I suppose. Contracts can also expose you to risk just in the same manner that they shelter you from it so be careful. A quote is essentially a simple contract.

Exactly, scope creep can be addressed by good change management, formal scoping of requirements and good communications with the stakeholders and project management.

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tonyhughes

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#130288 12-May-2008 16:58

I have previously used quotes where we stated the following:

Quote is valid for x days.
Quoted cost may vary, even within the Quote validity period, due to supplier price changes.

That was pretty much all we needed. Used to change prices up and down all the time for various reasons.