Bid Proposal

The Importance of Price: How to Construct a Bid That's Just Right

Posted by Stacey Papp

We all know the story of Goldilocks: porridge too hot, chair too small, yadda, yadda, yadda. Well, it’s a classic for a reason. As business owners, you’re always striving for things to be just right, especially when it comes to bidding a job. 

If you underbid, you’re not just leaving money on the table. You’re also forcing your business to function on a slimmer margin than necessary — and in the worst-case scenario, failing to break even. But overbidding is just as bad. If your quote is significantly higher than the going rate, you’re almost virtually guaranteed to lose the job. And then you’re not just leaving some money on the table. You’re leaving all of it. So what do you need to consider when developing an accurate bid?

Route. The distance of the trip is one of the key factors that go into any bid. There’s more than one way to get from point A to point B, however. Calculating the most efficient route in advance — one that avoids construction, accounts for perennially congested roadways and makes use of the most straightforward paths — will give you a much clearer picture of the time and gas your drivers will invest in the job. (Bonus: more efficient routes mean less wear and tear on your fleet! Everybody wins.)

Idling time. Much of the job will be spent just sitting in the vehicle, either stuck in traffic or waiting for the customer on the other end. But tracking idling time from similar jobs will help you get a good idea of what to expect on new ones. Then you can account  for the time your drivers will spend in the vehicles, as well as how much gas they will consume simply sitting and waiting for something to happen. And, ideally, once you’ve started tracking idling time, you’ll be able to figure out ways to reduce it and lower both labor and gas costs.

Past experience. From the first two points, you’re probably starting to realize that keeping a precise record of your jobs can go a long way toward helping you develop more accurate bids in the future. Whether you’re comparing a new customer with a previous job or figuring out the best price for an established one, clear, detailed reporting will provide invaluable information. In addition to helping you analyze driver activity, you’ll also be able to justify every aspect of your bid with concrete information.

Knowledge is power, and the more information you have at your fingertips, the more likely you’ll be to develop a bid that’s neither too high nor too low — but just right for making your business a winner.

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