In this article, we'll look at what makes quoting software perfect for smaller manufacturing businesses and how to take what is a weakness to many companies and turn it into a competitive advantage with automation, time-saving tips and pricing for profit secrets.
For many small manufacturing businesses quoting is their Achilles heel. It can be very time-consuming and yield no return. It is an essential part of running a manufacturing business because you're unlikely to win new work without quoting and inevitably fail.
We work with small manufacturing businesses daily, and whilst there are broad quoting issues, they can all be simplified down to three core problems.
- They can't quote quickly enough, so they are too late to submit or miss deadlines.
- The quotes aren't accurate, and they often lose money on jobs.
- They quote customers who never seem to convert to live jobs.
Let's take a look at these problems, their causes and how to overcome them with quoting software built to give smaller manufacturing businesses a competitive edge.
Speed when quoting
It's simple, the more quotes your estimators can send in a working day, the chances of winning new work improve drastically. Intelligent quoting software with powerful databases, including pricing information, will help estimators save hours every day.
Dropdown selections with pre-populated prices
By using dropdown selections, estimators not only save time by not having to search for prices but reduce manual entry and eliminate input errors.
Useful dropdowns include:
- Customer profile
- Supplier profile
- Inventory materials & components
- Machine, process and labour costs
Use quoting templates
Create templates that can be instantly sent or edited to bespoke requirements. Highly useful when you produce similar parts regularly.
Use past quotes
You will likely be asked to quote a job that is similar to a job you have already completed. You can duplicate quotes and re-use previously created estimate costs, editing the material and time requirements to fit the new request.
Every customer will stress the importance of getting a quote quickly and chase you for a price, so how do you prioritise which quotes to complete and submit first?
Quoting software will help you identify which customers convert and spend the most and report on lost reasons to improve your quoting performance.
Find out which customers spend the most
Whether you view this in your quoting software or your customer database, seeing the total spend is crucial. Returning their quote requests quickly to keep them happy is an excellent way to prioritise which jobs to quote first.
Identify which customers convert to live jobs
Different from the total spent, a single customer may have had one abnormally large project. Customers with high conversion rates create repeat business.
If a customer has a low conversion rate, they should be quoted last as the probability of lost revenue is less, should you decide which quote deadlines to meet.
Discover lost reasons
Following up on quotes is a great way to show professionalism and help increase conversion rates by developing a relationship. It's also the ideal moment to gather lost reasons so you can report on and attempt to eliminate them.
For example, if customers rarely convert due to price, do they request enough quotes to make it worth dropping your margins to win more work?
We've left the most essential factor till last because if your quotes are losing you money, it doesn't matter how many you send or who to.
Calculate accurate overheads
Start by calculating the base costs you need to cover. This can be done per machine, but dividing the company's total costs by the number of machines/staff is more manageable.
Costs to consider are:
- Utility bills
- Legal fees
What margin do you need to charge on every job to ensure that the basic costs of operation are covered?
Understand how long production takes
Estimators are only as good as the information they are given or can view. This is where quoting software and MRP systems come into play. You'll store valuable data if you assign time to jobs after completing them or have a live data capture from the shopfloor using time stamps.
If the estimator is unsure how long they need to budget for a process with quoting, they can look back at previous jobs to understand how long it has taken in the past.
Use up-to-date material prices
Prices are constantly changing, especially for raw materials, making it crucial to have a quoting system that is synced with an inventory function so that item values are up-to-date.
Use markup and margin percentages
It would help if you quoted using benchmarked margins for jobs and markups on materials to make consistent profit margins. To make this as easy as possible, use quoting software that allows you to create cost estimates and enter a margin or markup at the end to auto-calculate the quote total.
Any small manufacturing business should begin using quoting software, and it is often the best place to start when considering implementing systems to help improve business performance. Here at Statii, we created the Liite system, a free-for-life customer and supplier database coupled with quoting software. You can claim your system for free here.