Requoting jobs and plausible price increases

vmipacman · Mar 24, 2021

I have a situation where I quoted a design & build project. Not a very big job, just under 10k for a custom device for factory assembling. We met and talked and met and talked. Then they asked for a mock-up so they could check it with the operators, so I did it. Then they asked for a quote. I had forgotten at I already quoted it(I had a different project folder for quotes). And there are several small projects like this with these folks (none of which have been bought), I got mixed up what was quoted previously. Well I requoted 7k higher. They are calling me on it to justify the increase. And from the first quote to the second, the overall design hasn’t changed much, just taken 4 months of working with them. I’m not very unexcited about it at this point.
I feel embarrassed about my mistake. They prob think I’m gouging them. The first quote was ok had they pulled the trigger and we moved quickly to get one under our belts. I wouldn’t have made much but they need several more. The second quote is after I have been through the design in greater detail, plus I have a bunch more time in it upfront, and it’s the number that makes me excited again about doing the job.

How do I justify the new number in a acceptable business-y way? Or do I apologize for the mistake and revert to the original?

Milland · Mar 24, 2021

You spent a lot more time on the project, and made a model. Where you compensated for this time? If not, I would think it's acceptable to state "adjusted for further design detail assessment efforts" or something similar.

Forgetting about the earlier quote is unfortunate, but losing your shirt on getting a job completed is worse...

gbent · Mar 24, 2021

Almost every person in the industrial side I have spoken to in the last month or two has stories of stuff that is unavailable/long lead/significant price increases. Between the materials costs and the significant extra time you have spend developing the project you should be able to justify the price increase.

EmGo · Mar 24, 2021

vmipacman said:
How do I justify the new number in a acceptable business-y way? Or do I apologize for the mistake and revert to the original?

It wasn't a mistake, it's more accurate. I'd just tell them that after we did the preliminaries I went back and recalculated, the new quote is more correct according to actual costs.

Then, if you want the job, you can offer to split the difference, do it for the original price, or stick to the higher one. It's your shop, after all. That's what you get for the joy of being owner.

workin stiff · Mar 25, 2021

If you missed by seven on a ten you will never make it.

Trueturning · Mar 25, 2021

Tough. It is one of the best lessons you can ever get if you learn from it. Feeling the uncomfortable feedback from the customer may for most all who bid jobs in our trade is likely the only real critique one may ever get.

By extension consider how this effects daily operations also. Smoothe it over the best that you can as everyone could make mistakes in bidding jobs because it is tough but it would be a terrible waste to not learn what you need from this to vastly improve your bidding processes. I guarantee you by extension it will cost much more unless examined and acted on in a positive manner.

vmipacman · Mar 25, 2021

Trueturning said:
Tough. It is one of the best lessons you can ever get if you learn from it. Feeling the uncomfortable feedback from the customer may for most all who bid jobs in our trade is likely the only real critique one may ever get.

By extension consider how this effects daily operations also. Smoothe it over the best that you can as everyone could make mistakes in bidding jobs because it is tough but it would be a terrible waste to not learn what you need from this to vastly improve your bidding processes. I guarantee you by extension it will cost much more unless examined and acted on in a positive manner.

Yes. Lessons learned. But lets see if I learned the right ones...

Slightly different question, but the answer on how I approach this should be the same. Just posed a little clearer, taking the design/build aspect out of it.
Lets say you are a sales rep for a custom product. Normally you have a 20% markup. Customer asks for a quote and you give it. Whereas you might have a trip or meeting then PO, it's instead longer drawn out. There is a lot of back and forth and trips to the facility and extra stuff, and a demo of sorts. Is the price always static and the ownes is on the sales rep to call it quits when he identifies they are a waste of time? Or can he increase his margin when the old quote runs out so as to recoup his time?

BoxcarPete · Mar 25, 2021

vmipacman said:
Yes. Lessons learned. But lets see if I learned the right ones...

Slightly different question, but the answer on how I approach this should be the same. Just posed a little clearer, taking the design/build aspect out of it.
Lets say you are a sales rep for a custom product. Normally you have a 20% markup. Customer asks for a quote and you give it. Whereas you might have a trip or meeting then PO, it's instead longer drawn out. There is a lot of back and forth and trips to the facility and extra stuff, and a demo of sorts. Is the price always static and the ownes is on the sales rep to call it quits when he identifies they are a waste of time? Or can he increase his margin when the old quote runs out so as to recoup his time?

Sounds like you're on the right track here. You can do either. If I remember correctly from earlier in the thread, you mentioned that this customer has gotten you involved for design and fiddly stuff without making any substantial purchases. Quote them what you think is worth the likelihood of their wasting more of your time, so if you get the job it's all worth it. Or no quote and walk away, use that time for something that will bear fruit.

UGLYMRJ · Mar 25, 2021

You partially answered your own question. You have more details about the job now, understand that it will take more time than originally thought. Convey that to them openly and honestly. Let them know you under quoted the first time, but you stated that they've bought zero jobs up until this point as well so I wouldn't waste too much time or energy on it.

I would simply tell them that as you received more info that you under quoted the first time but will run the numbers and see if there's anywhere that you can "trim the fat".

DanASM · Mar 25, 2021

I have been quoting my jobs as time + material lately. It helps show the customer why the price went up or down and not have to explain why your quotes are all over the place.

Mud · Mar 25, 2021

I recently had similar, a customer wanted an updated quote for more of what he had previously ordered. I worked hard on the quote to be sure I was considering everything. I discovered I needed significantly more this time, like 15%. When questioned, I was honest - "I screwed up on the previous order".I had worked from a quote for a different assembly and modified it, and forgot one of the parts for the second that was not included in the first. Plus labor increase, material increase etc.I laid things out in detail, showing how he could get a lower price by ordering larger quantities. Got a little pushback but still got the order.

Ox · Mar 25, 2021

vmipacman said:
I have a situation where I quoted a design & build project. Not a very big job, just under 10k for a custom device for factory assembling. We met and talked and met and talked. Then they asked for a mock-up so they could check it with the operators, so I did it. Then they asked for a quote. I had forgotten at I already quoted it(I had a different project folder for quotes). And there are several small projects like this with these folks (none of which have been bought), I got mixed up what was quoted previously. Well I requoted 7k higher. They are calling me on it to justify the increase. And from the first quote to the second, the overall design hasn’t changed much, just taken 4 months of working with them. I’m not very unexcited about it at this point.
I feel embarrassed about my mistake. They prob think I’m gouging them. The first quote was ok had they pulled the trigger and we moved quickly to get one under our belts. I wouldn’t have made much but they need several more. The second quote is after I have been through the design in greater detail, plus I have a bunch more time in it upfront, and it’s the number that makes me excited again about doing the job.

How do I justify the new number in a acceptable business-y way? Or do I apologize for the mistake and revert to the original?

Quite honestly, I think that I might tell them almost exactly what you just put down here.

gbent said:
Almost every person in the industrial side I have spoken to in the last month or two has stories of stuff that is unavailable/long lead/significant price increases. Between the materials costs and the significant extra time you have spend developing the project you should be able to justify the price increase.

Wuhan Flu sure has some broad shoulders....
All the Schidt that has been blamed on that ....

In all fairness tho - much of the issues that we are dealing with currently - likely stem from unemployment paying [much] more than working, so - yeah, maybe Wuhan...

-----------------

Think Snow Eh!
Ox

johfoster · Mar 26, 2021

Do you still think $17k is a fair and honest price for the work? Nothing wrong with saying "I really screwed up the first time I apologize, and I am glad I re-quoted it because it was way too low originally". (and then say to yourself "maybe you should have gone for it instead of wasting a bunch of my time for free")

I learned over time that when I send a quote to a new customer, and am asked to provide some form of prototype part or mock up. I send another separate quote for that work explaining that if they go forward on the original bid I can of course first make a prototype for final approval, or if they go forward afterward I will deduct the prototype charge from the overall cost. Make free parts for people just so I can maybe get the job...no thanks. Funny how that makes a lot of "I only need 3 now, but there will be a few hundred later" just disappear...

To try to say that the price went up for the extra work that wasn't included, but you have already done for free will be a hard sell I'd think.

Also my material vendors will only hold quotes for 24hr, 4 months might as well be 4 years in the current world we're in. Might not explain the entire 7k increase, but certainly some of it.

Ox · Mar 26, 2021

On the other side:

The customer was interested when it was a $10K project.

It sounds like they know that you have done some leg work in the mean time and are maybe giving you an opporntunity to CYA for that, but then when they find that it is a $17K project, well - that may be a horse of a differ'nt colour.

Whether the job might not be worth $17 to them in the first place, and if it was going to be $17K, maybe their prefered supplier for that might have been at $15K?

It could go anywhere from "Yeah, I thought so, that's fine."

to them feeling baited and switched...

Both responces being perfectly ligit.

-------------------

Think Snow Eh!
Ox

mattthemuppet · Mar 26, 2021

sounds like they're dicking you around. Lots of maybes/ we like its/ etc etc but have you been paid anything by them for completing any project you previously quoted? They clearly view your time as free, as well as any materials that went into making the mockup.

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Requoting jobs and plausible price increases

vmipacman

Cast Iron

Milland

Diamond

gbent

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EmGo

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workin stiff

Banned

Trueturning

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vmipacman

Cast Iron

BoxcarPete

Stainless

UGLYMRJ

Plastic

DanASM

Hot Rolled

Mud

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Ox

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johfoster

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Ox

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mattthemuppet

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