Charging for quotes

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mattwnz

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#147217 12-Jun-2014 17:38

Just wondering if anyone charges for quotes or proposals for development work (or any work). I noticed that on Fair Go yesterday, they had a company that charges for quotes, as the quote can require several hours of work. I hadn't really heard happening before, but can see where they are coming from. Sometimes I spend an hour or so going through someones development needs, and then you never hear back from them, despite following it up with them . So I was wondering if they would value it more if it was charged for it. I have come to the conclusion that it is better just to initially give a brief estimate, and spend far less time going through their needs, than preparing fixed quotes, due to the amount of wasted time, as people seem to mainly look at the price. What do other IT Pros do?

MikeB4

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#1064272 12-Jun-2014 17:53

I would not use a company that charged for quoting. Having said that I decided to check with my wife who deals with this daily from both sides of the desk, she was very succinct, it is a very bad business practice, she believes it will make their day very easy going as they would not be having their coffee interrupted by work.

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Coil

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#1064274 12-Jun-2014 17:56

Last time i got a free quote the job was actually 20% more expensive. (car related)
I suppose for corporate level business in IT a charged quote would be acceptable but its not the way people have always done it really.

"It takes time to provide a quote, so the seller may charge you a small fee for the quote. Ask them about this beforehand."

http://www.consumeraffairs.govt.nz/for-consumers/services/getting-quotes-and-estimates

myfullflavour

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#1064305 12-Jun-2014 18:35

We work with various local IT providers who do the hands-on work for business fibre installations.

It's a mixed bag - the firm we use in Hamilton charge for quotes, so our reps are usually 80% confident the client will roll with the proposal before sending the techs out to investigate.

In Tauranga it's a bit more relaxed - some firms will simply turn away work if they are too busy, the quieter firms will happily do quoting work to get the business.

Inphinity

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#1064339 12-Jun-2014 19:28

It really depends on a "quote". I wouldn't charge to give a quote to do something fairly standard, but I've had cases where a company will ask something vague like "Give us a quote to make our systems secure" which, when it's a large and complex environment, I'd normally turn around and suggest an assessment first, which may or may not be free depending on the scope.

RedJungle

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#1064341 12-Jun-2014 19:32

In my experience its very rare for someone asking for a quote for a software development project to provide a sufficient brief/specification to quote against. It's typical for many hours of BA work to be required to get to that stage.

MikeB4

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#1064342 12-Jun-2014 19:32

Audits and assessments etc are different and should be billable

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networkn

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#1064391 12-Jun-2014 20:20

It's interesting because we have struck this a few times, where we will be called in to "quote" for replacing aging IT equipment, say 2 servers and 20 PC's and put a LOT of work into design, explaining it all to the customer, paring down the options they don't want, and then have them email it to PB Tech who throw 1-2% margin on it, and bingo! I had a customer do this recently and sent him a bill for $1000 for consulting, which after some grumbling he paid. In the end he admitted it was a bad way to do business and asked us install, configure and maintain it. We lost the sales margin, but picked up what I think will be a long term customer who will buy from us going forward (Additional stuff during the install that he decided he wanted, was supplied by us).

I've had it happen and not go as well, and lost a lot of time and therefore money. After I stop steaming, I figure what comes around goes around.

If a new customer just wants an estimate of work for a straight forward job, we will give an hourly range and advise them if it differs heavily we will advise them as soon as practical and seek permission to continue with the new estimate.

The way we handle audits, is we say, we estimate audit will take x hours @ x hourly rate, but if you proceed with recommended work to the value of the Audit x 3, we will do the audit for free. I think this is a fair way to handle it.

raytaylor

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#1065106 13-Jun-2014 18:06

KBM are clients of mine.
I know they do really good work, and they do indeed put alot of time and effort into their quoting - which isnt just an estimate.

Unfortunatley for jobs like that, where you do have to spend time onsite, it can be a real drain on resources when if you dont recover your costs, you still have to pay the staff wages.
For a job like that they will usually have a tech go out on site to perform measurements, get onto roofs to work out piping, as well as someone researching supplier part pricing in the office.

Kinda cool to see an invoice template I designed on TV :-)

I deal with this every day in rural broadband.
Sometimes we cannot install a radio dish on a potential subscriber's roof for which we charge a flat rate install. Sometimes it needs to be mounted on a garage or a mini radio link between the house and pump shed needs to be used - so the main dish can get line of sight to the tower.
Going out to perform a quote can often use up half a tank of diesel, road user charges, and 3 or 4 hours labour.
I often spend half a day on site trying to find a solution for someone only to find they decided they would go for RBI because its cheaper to install (250 vs 600 dollars) and they would happily pay the extra $50 a month.

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andrewNZ

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#1065150 13-Jun-2014 19:38

I don't have a problem with someone charging to quote provided it's stated up front and is a reasonable price. I imagine in some industries it stops people getting quotes for the hell of it.

The thing you really have to be careful of is quotes that aren't obligation free, i.e. if they quote they must do the work.

Handle9

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#1065196 13-Jun-2014 20:57

It's just the cost of doing business. In the industry I am in (building automation) I can spend two weeks preparing a quote on a good size job but the normal procurement method is either open or closed tender. You either quote for free or you don't get work.

The key is getting to know what types of jobs you are likely to get, and what sort of jobs you never get, or don't want. If you stop quoting that work then you get a much better hit rate and your SGA % cost is much lower. Just really depends on the type of business you do, and what sort of business you want to do.

timmmay

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#1065325 14-Jun-2014 08:08

At the high end of software development an RFP can take weeks to do and costs tens of thousands of dollars, companies don't charge for them, it's considered a presales cost.

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TwoSeven

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#1065354 14-Jun-2014 09:52

In software development you'd normally get a ballpark estimate to give you an indication. An exception where a quote will be provided instead is a "fixed price contract" where the work is known and agreed upon in advance, however, this may in itself be subject to a ballpark figure which is amended once the discovery process (requirements) has been completed. A time and materials project will usually always be ball-parked first with an agreed upon rate and terms and conditions. Often in this case, work will be subject to an approval to proceed before being committed.

It will often be a "cost of doing business" however, I have seen cases where the customer is charged, usually when they have requested a discovery process as part of a deliverable - kind of a consulting fee.

Formal estimates (more detailed than a ballpark) will often be done on a time and materials bases often agreed up-front as there is often a discovery phase that needs to be completed before any estimate can be provided.

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