Win More Jobs By Giving Them Options – Estimating Tip

When it comes to pricing projects and giving people estimates I recommend giving people options. What I mean by that is most people out there, when they do an estimate or a bid, they just give one option and one price. So the client only has two options, they can take it or leave it. There are a few reasons why this isn’t the best way to do it. Maybe sometimes it’s appropriate to just give them one estimate and that’s all good but if it’s a bigger project, for example, a big deck, but it’s a kitchen remodel, they’re gonna have options. I’ll tell you a quick story of what prompted me to start doing this.

So, many years ago, I was bidding for a kitchen remodel. I think the bid came out from $60k to $70k. And, we didn’t end up getting that job. I circled back around with that person and I just approached them and I wanted to find out why didn’t we get that job. It turns out that we bid too low. This guy had it in his mind that he wanted a $100k kitchen and we only bid $70k. And so, in his mind, he wasn’t getting the contractor for him and he ended up going with someone else that had a higher bid. And that’s the opposite of what most people think happens. Most contractors I talk to are always knocking the price down. They come out with an estimate, and they’re like “Oh man, that’s a lot of money, I really want this job, let’s cut some costs here.” They’re always trying to make the bid lower. But sometimes that’s the opposite of what you need to do for a certain client.

So, what I propose is having different levels to give people options. We do this all the time in the web design and marketing industry. It’s really hard to get a website proposal where you don’t have different options. Usually, I have three tiers. You’ll have a high, a low, and a mid-tier. And you can do the same thing with your remodeling or building estimates. You can have two or three options. But, let’s say you’re pricing a kitchen remodel, maybe you have one option that’s got all the most high-end finishes that you can offer and that’s the high price. And then, you’ve got the budget price which is the low one where you’re just doing the bare minimum. And then you’ve got the mid-mid range which is exactly what the client said they wanted.

This way when somebody looks at these things, their psychology goes into pricing things. This is the same as when you go to like a store or high-end boutique or something like that. They’ll always have like something at one price sitting right next to something with a price that’s like five times higher. Then, when you look at that five times higher price and you’re like, “That’s really expensive!”, and now all of a sudden the other price looks really attractive. It’s the same thing with your estimates.

It’s like having a $100k kitchen remodel priced sitting next to a $70k kitchen remodel and you also got a $50k which is like the bare minimum. It doesn’t have everything that they asked for but that’s like the bare minimum. Now they’ve got some things to compare it to and that mid-grade $70k kitchen remodel is looking pretty good right now. That’s because it’s not a hundred thousand dollars but it’s also not the cheapest option. That way, people feel like they’re getting a good deal but they’re also getting all the things that they want. And occasionally you’ll have that person that wants the best of the best of the best all the time and one way they determine if it’s the best is that it’s the most expensive. So by having that super expensive option, you’re not pricing yourself out of getting those clients who only want the high-end stuff like I did that one time.

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