Strategies for Improving the Accuracy of Your Price Quotes

Sales Quotation form with fountain pen. sage operations management

Accurate price quotations are crucial for avoiding headaches and disappointment. There’s nothing more frustrating than providing a customer with a quote only to realize later that the actual cost exceeds it by a wide margin. When faced with this scenario, you’re left with three unappealing options: bargaining the higher price with the customer, negotiating lower rates with suppliers, or simply absorbing the difference.

The best way to avoid this scenario is to ensure accurate price quotations. Two ways to do so are to improve your approach to pricing and to use Sage Operations Management. Let’s talk about ways to improve your pricing strategy first, then dive into Sage Operations Management.

Create a Quotation Sheet

To ensure accurate price quotations, you must have the correct inputs in writing from your customers. If customers rely on conversations with you and expect you to generate prices from these conversations, chances are good something will go awry. Perhaps important information isn’t conveyed about project specs, or you think you’ve got all the details right, but the customer didn’t express them adequately. No matter what the reason, there’s a simple way to avoid miscommunications: create a quotation sheet.

A quote sheet is a simple questionnaire that helps you ask the same questions each time you speak with customers about a job estimate. By having the questions written down, you’ll gather consistent information from your customers so you can develop accurate price quotes. Additionally, because the information is in writing, there’s little room for error. You can review the information before creating the quote to ensure accuracy and ask any clarifying questions.

Consider an RFQ

Some businesses issue an RFQ to potential vendors to ensure that all responses enable an apples-to-apples comparison. RFQ stands for “request for quotation.” It is a document that a company issues to multiple vendors, requesting the same information from each vendor. Like an RFP (request for proposal), the RFQ provides a consistent base from which companies can compare multiple vendors. The form is similar to the quotation sheet, except it is generated by your customer and shared with you and others to help you develop an accurate price quotation.

Check the BOM

Some areas of the quotation process are more prone to errors than others. For example, the Bill of Materials (BOM) may contain errors. If they aren’t caught early in the quotation process, these mistakes can feed into the quotation process, causing inaccurate price quotations.

There are other areas of pricing that are also easy to forget. For example, do you charge for prototyping? If so, how many prototypes are you willing to create for a fee, or are they each priced individually? Product testing is another area that may be priced but is easy to overlook. Other areas to include are shipping, handling, and any extra charges, depending on the complexity of the job.

Sage Operations Management Automates Accurate Price Quotations

One way to help ensure accurate price quotations is to use software to help you price jobs. Sage Operations Management provides fast and accurate job cost estimates by adding the costs of components, such as labor, materials, and subcontracted services. It provides a complete view of all the costs associated with the job so that you can make the best pricing decision possible. And, because it syncs with Sage 100, you’ll also minimize data entry risks; all of the job cost data flows seamlessly from Sage Operations Management into the ERP system, eliminating human error. Sage Operations Management is a great choice for make-to-order manufacturers to streamline the quote-to-delivery process. Fewer mistakes and greater efficiency contribute to higher profits.

Sage Operations Management allows you to select your own valuation method: FIFO, LIFO, average cost, or lot valuation. It provides a detailed roll-up from a combination of BOM, estimated purchases, routers, labor, and contracted services. The system also copies over past quotes, providing you with an easy way to reuse existing quotes and update them as needed.

Learn more about Sage 100 or Sage Operations Management for better, more accurate price quotations. Contact Emerald TC with your questions or to explore Sage solutions for manufacturing.

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