Just starting to quote stuff and wanted to know, do you ask for a percentage from the customer when you win a quote to cover some expenses? How is the money exchanged? Do they send you a check? (I'm showing my age) I'm thinking you need a business bank account? Thanks
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When you win a quote
- Thread starter WENZEL
- Start date
- Replies 32
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BoxcarPete
Stainless
- Joined
- Nov 30, 2018
- Location
- Michigan, USA
Don't ask for money up front unless it was in the quote that way.
I worked at a small machine builder for custom EDM stuff, they would take 50% at the time of order, 40% on delivery, and 10% on approval, but if you want to do something like this it needs to be clearly communicated in the quote. Bear in mind that lots of places, especially larger businesses, like to delay paying for as long as possible due to the time value of money and other financial games, so asking for money down is a competitive disadvantage.
I worked at a small machine builder for custom EDM stuff, they would take 50% at the time of order, 40% on delivery, and 10% on approval, but if you want to do something like this it needs to be clearly communicated in the quote. Bear in mind that lots of places, especially larger businesses, like to delay paying for as long as possible due to the time value of money and other financial games, so asking for money down is a competitive disadvantage.
mhajicek
Titanium
- Joined
- May 11, 2017
- Location
- Minneapolis, MN, USA
Standard practice around here is you get paid 30 days after delivering the work and sending the invoice. It would be fair to ask for the cost of the stock up front if it's a large order from a new customer, or if the stock is outrageous, but that has to be in the quote.
"I'm thinking you need a business bank account. "
Yep I'm thinking you do.
Seeking a percentage. Yeah it can be a bit of a tricky 1. How much competition do you have in your area? An investigation into what others are doing around you would probably help on this one.
For a regular cust who has established a good rapport with you, then I personally wouldnt.
New cust - job that is big by your standards, then absolutely. Particularly if they are pushing for terms on payment. Just dont go silly on it.
Just my 2 bobs worth.
Yep I'm thinking you do.
Seeking a percentage. Yeah it can be a bit of a tricky 1. How much competition do you have in your area? An investigation into what others are doing around you would probably help on this one.
For a regular cust who has established a good rapport with you, then I personally wouldnt.
New cust - job that is big by your standards, then absolutely. Particularly if they are pushing for terms on payment. Just dont go silly on it.
Just my 2 bobs worth.
mhajicek
Titanium
- Joined
- May 11, 2017
- Location
- Minneapolis, MN, USA
Yes, you absolutely 100% need a business bank account, and don't mix funds. Everything you get paid by clients goes into that account. Business expenses, like material, cutters, overhead, etc. all come out of that account. Cut yourself a paycheck at least once a month from that account to your personal account, whether you need it or not. If you want to invest more personal funds into the business, cut a check from your personal account to the bank account. Keep records of all of this.
Scruffy887
Titanium
- Joined
- Dec 17, 2012
- Location
- Se Ma USA
Winning a quote does not mean you won anything. Just saying.
michiganbuck
Diamond
- Joined
- Jun 28, 2012
- Location
- Mt Clemens, Michigan 48035
Tell them to slide the cash under the table so nobody knows.
Ops, just kidding.
I had to have a business account..nobody would cash a check made out to my company with not having a company account.
Ops, just kidding.
I had to have a business account..nobody would cash a check made out to my company with not having a company account.
If you are operating as a business and not an individual, you will definitely need an account in the name of the business. Opening this account will require a business license. If the check will be made to you personally, I would still open a second account. DO NOT comingle funds.
You are in a tough spot since your quote didn't specify money up front.
You didn't say how much the total of the quote was, nor how much the material cost is.
Fred taught me very early "Never take a job that is big enough to break you."
He also taught me "Beware of unsolicited business."
You are in a tough spot since your quote didn't specify money up front.
You didn't say how much the total of the quote was, nor how much the material cost is.
Fred taught me very early "Never take a job that is big enough to break you."
He also taught me "Beware of unsolicited business."
CarbideBob
Diamond
- Joined
- Jan 14, 2007
- Location
- Flushing/Flint, Michigan
Payment terms and conditions should be on your quote to the customer in step one.
john.k
Diamond
- Joined
- Dec 21, 2012
- Location
- Brisbane Qld Australia
There is a special technique used in bidding on government contracts ......first .....low bid to win contract........next ,no delivery,but you submit a request for a price variation .....generally twice what the contract rate is.......having recieved the price increase,you supply maybe 10% of the total.......then submit a request for a price increase.....and so on.
PDW
Diamond
- Joined
- Jul 24, 2006
- Location
- Australia (Hobart)
Yeah I can see how that'd work with the QUEENSLAND Government.
If you'd tried that on me when I worked for the Federal Govt I'd have canceled your contract in a heartbeat. For a lot of things I used to put in a clause saying that time was of the essence and no delivery past day X would be acceptable, failure to deliver into my store was an automatic cancellation.
Usually because whatever it was had to go aboard a ship, we knew when the port call was and if it didn't get fitted then, it wasn't going to be needed at all. So I wasn't going to be fucked about.
PDW
Doug
Aluminum
- Joined
- Dec 16, 2002
- Location
- Pacific NW
You should have a separate business account. You might try a small local bank to see if they'll let you use a regular bank account for your business. Most of the big guys like B of A will have all sorts of fees for a business account.
My business account was set up with a small bank like this:
John Doe
dba Doe Machine
I always figured asking for money up front does not reflect well on a business. If you can't afford to play you shouldn't be in the game. By asking for up front money you're basically asking the customer for a loan. Can you justify your credit worthiness for a loan from a new customer?
You definitely should ask a new customer for at least three local and recent credit references. If they don't or can't supply the references you may not want to deal with the customer. I preferred to verify supplied credit references over the phone. People will usually give little hints over the phone about a company that they might not want to put in a written response.
My business account was set up with a small bank like this:
John Doe
dba Doe Machine
I always figured asking for money up front does not reflect well on a business. If you can't afford to play you shouldn't be in the game. By asking for up front money you're basically asking the customer for a loan. Can you justify your credit worthiness for a loan from a new customer?
You definitely should ask a new customer for at least three local and recent credit references. If they don't or can't supply the references you may not want to deal with the customer. I preferred to verify supplied credit references over the phone. People will usually give little hints over the phone about a company that they might not want to put in a written response.
BT Fabrication
Stainless
- Joined
- Nov 3, 2019
- Location
- Ontario Canada
I always had a 50% up front with any new customer untill they get a few orders in. Don't matter if its $300 or $5000. Most steel places around here require payment in full before delivery or get approved credit on an internal account with them. I always quote this way, or quote in full things that can't be returned, like large outsourcing to a laser shop for specific parts.
It is a small job and material is not a ton.
BT Fabrication
Stainless
- Joined
- Nov 3, 2019
- Location
- Ontario Canada
Why do you need software for quoting? general fab is different then machining and only comes with experience. Sure you can guess numbers, but only way to know what your min is, is to know what are your costs exactly at down to the penny.
What costs do you 100% know you need to break even minimum? This is all expenses, not including labor. Simple business stuff.
What costs do you 100% know you need to break even minimum? This is all expenses, not including labor. Simple business stuff.
Ox
Diamond
- Joined
- Aug 27, 2002
- Location
- West Unity, Ohio
I use a pen/paper. (the paper is semi "soft" I guess?)
Write down outside costs.
Guess at internal costs.
add it up.
Pyramids were built w/o software (that we know of)
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Think Snow Eh!
Ox
Cash flow is not an issue I struggle with so I am net30 unless there is some crazy scenario such as 6 figures of material or machine purchases or something.
Some of the work I do requires multiple steps where I machine a primary then ship to the customer for processing before being returned for finishing work. I have learned to do separate line items for each step so I can bill after both steps. The customers best intentions to turn the parts around quickly can easily get derailed then you are out material and time to process until 30 days out.
I do require new customers to either put some money down or pay at delivery until they have established a good record.
I have tried to use software for quoting but found paper and pencil + experience has been better. I will often times get to the end of the quote and think "that isn't enough" or "thats too much" and back it down. It might not be pretty but it lands 6 figure projects all the same.
Some of the work I do requires multiple steps where I machine a primary then ship to the customer for processing before being returned for finishing work. I have learned to do separate line items for each step so I can bill after both steps. The customers best intentions to turn the parts around quickly can easily get derailed then you are out material and time to process until 30 days out.
I do require new customers to either put some money down or pay at delivery until they have established a good record.
I have tried to use software for quoting but found paper and pencil + experience has been better. I will often times get to the end of the quote and think "that isn't enough" or "thats too much" and back it down. It might not be pretty but it lands 6 figure projects all the same.
Doug
Aluminum
- Joined
- Dec 16, 2002
- Location
- Pacific NW
First time I quoted a job for a machine shop I told them 8 bucks each. I went over to pick up the blanks and he gave me a PO and said just like you quoted 20 bucks each.
So I'm quickly thinking, did they misunderstand my 8 buck quote? And not wanting trouble over this first job I better clarify that my quote was only 8 bucks per part. His response was, yeah, we saw the 8 bucks, but you can't do them for that kind of money. 20 bucks is what we'll pay.
After about 3 months of the "guess what we'll pay" game I was getting pretty close to what they were willing to pay.
So I'm quickly thinking, did they misunderstand my 8 buck quote? And not wanting trouble over this first job I better clarify that my quote was only 8 bucks per part. His response was, yeah, we saw the 8 bucks, but you can't do them for that kind of money. 20 bucks is what we'll pay.
After about 3 months of the "guess what we'll pay" game I was getting pretty close to what they were willing to pay.
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