"Bid" is an imprecise word that fosters confusion. Is a bid an estimate? A final quote? What do homeowners think they are getting when they receive bids for their project—and how do their expectations compare to what they are actually getting?
Bids are often solicited before a project is fully designed and specified. The homeowner desires a new kitchen, so they seek competitive bids thinking that they are being smart shoppers. Reputable companies use allowances and disclaimers to deal with the lack of definition and clarity. Less-reputable companies capitalize on that lack of clarity by submitting a bid and then surprising the homeowner with change orders for all the things that weren’t initially specified.
Homeowners think they are getting solid quotes, while remodelers are providing estimates. This disparity leads to frustration, loss of jobs at the eleventh hour, and wasted time.
Choose Your Words
Start by not using the word "bid." Scrupulously say "estimate" until the job is defined enough to be quoted. Refer to the initial budget range as a “ballpark estimate”; any pricing during design development as “updated estimates”; and the price on the construction contract as a “quote.”
Educate your potential clients that an accurate quote is impossible before a job is completely designed and specified. Prior to finalizing design and specs, they will have to rely on estimates to guide their choice of contractor, scope, and features. Help them see that the early estimates they often call bids are not a reliable indicator of which remodeler will provide them the best final value. Those estimates are primarily useful for establishing a price range and setting a realistic budget.
Your initial estimate should be a price range. When the homeowners set a budget within that range, tell them you will help them finalize design and specifications to make the most of their investment without exceeding that budget. Once you complete that process, you’ll be able to give them a price for the job they really want; one that won’t change unless they ask for a change.—Richard Steven, president of Fulcra Consulting, specializes in helping remodeling companies create and implement effective management plans.