How small business software like quoting systems, QuickBooks, and Zoho can empower the SMB with enterprise-level tech (and revenue streams!).
Pricing is something that every business loses sleep over at one point or another. Setting a price is an important decision with serious ramifications. Set the price too high and you risk losing customers. Set the price too low and you could devalue your products and damage the bottom line.
In particular, when it comes to quoting prices through proposals, there’s a lot to think about. How you convey pricing in a proposal format can ultimately determine whether or not you’re successful. Are you getting the price wrong?
4 Side Effects of Poor Pricing
“Pricing is as important as any business decision, but frequently it is treated as if it were no decision at all,” serial entrepreneur Jay Goltz explains. “Business owners just keep doing whatever they have always done, for better or worse. They do this because they fear they will — as they’ve been told a thousand times — price themselves out of the market.”
Are you still doing what you’ve always done, just because you don’t want to rock the boat? Well, be very careful. It’s entirely possible that the prices you’re quoting new prospects aren’t within the optimal range. If that’s true, you’re probably experiencing one or more of the following problems:
1. Hurts the Bottom Line
One of the most visible side effects of poor pricing is an impacted bottom line. Whether you go too high or too low, it’s likely that you’ll feel some sort of influence. High pricing alienates a large percentage of your prospects and drags sales down, whereas low pricing erodes your profits and stifles revenue. Regardless of which end of the spectrum you’re on, poor pricing can have a negative impact on your bottom line.
2. Damages Your Reputation
Let’s pretend you’re a customer and you walk into an auto repair shop because you notice that your vehicle’s air conditioning isn’t as cold as it should be. You ask them to take a look and diagnose the problem. Sure enough, they tell you there’s an issue and quote you $700 to get your air conditioning back to new.
Because $700 is a lot to spend on repairing your car’s AC, you decide to visit two other repair shops for quotes. One shop quotes you at $150 and the other says they’ll repair it for $175. Not only are you going to choose one of these lower priced quotes, but you probably have a pretty poor view of the first auto repair shop you visited. Either they tried to rip you off by charging you almost five-times the appropriate amount, or they’re totally inadequate at what they do and misdiagnosed the problem.
This is one of the biggest problems with poor pricing. Whether it’s purposeful or unintentional, quoting a prospect a ridiculous figure damages your reputation with them. Not only that – they’re likely to tell others about your pricing and you may end up losing additional business in the future.
3. Offends Prospects
The third problem with incorrect pricing is closely related to the second problem. When you give a prospect a price that they know isn’t in line with what the current market demands, they may actually take offense. You’re essentially telling them that you don’t believe they’re intelligent enough to know whether or not the price is right. In the end, this can erode your business relationships and even hurt existing client relationships.
4. Slows Down the Supply Chain
Depending on the industry and business you’re in, poor pricing may slow down the supply chain. When your pricing becomes too high or low for the marketplace, you’re going to see a change in demand. Regardless of whether this variation is positive or negative, you’ll be forced to adjust what’s happening at each stage of the supply chain.
Ultimately, poor pricing will lead to huge fluctuations in demand, which kills consistency and frustrates everyone involved. So, not only are you damaging your reputation with customers, but you may also be creating friction between partners in your supply chain. The long-term effects can be costly in more ways than one.
Avoid These Common Pricing Mistakes
In order to avoid the four common problems associated with poor pricing, you have to make sure you avoid pricing mistakes altogether. Here are a few tips to keep you in line:
Setting price based on cost. Sometimes it can feel natural to set prices based on cost, but this is a huge mistake. Price should always be based on the value you’re presenting to customers. This is the only way to establish long-term profitability.
Putting off changes out of fear. It’s fairly common for businesses to get used to their pricing and fail to make changes because they fear customers’ reactions. While some customers will be upset, you’ll be surprised to learn that most will be fine. If you couple price changes with appropriate consumer education, you’ll discover that customers are actually quite accustomed to pricing fluctuations.
Giving everyone the same price. It may seem fair at first, but you can’t afford to give every prospect the same price. You need to carefully segment your customers. Everyone has different needs and perceptions of your company. Remember, pricing matches value – so you should align your quotes with each prospect’s perceived value of your product.
Simply guessing. In the early days of business, it’s not uncommon for startups to simply guess. These guesses are often based on other similar products and services in the marketplace and the cost of production. While this may give you a decent “ballpark range,” it’s a pretty superficial foundation and will end up hurting you.
Setting prices is not something to be taken lightly. While there’s always the temptation to make these mistakes, it’s imperative that you surround yourself with the right tools and resources in order to avoid blunders.
Contact iQuoteXpress Today
At iQuoteXpress, we believe few things are as important to a growing business as consistency. If you want to build a steady and reliable client onboarding process, then you need the ability to develop high returning proposals and accurate quotes every time, without exception. With our CPQ solution, you can reduce proposal time by 50 to 75 percent, increase quote accuracy, and close more leads. What are you waiting for?
How to Qualify (and Disqualify) Prospects Prior to Sending a Proposal
The fitness equipment industry faces a number of unique challenges in the modern era, thanks in part to advancing technologies and changing consumer expectations that are shaping the sales world for a number of industries. The equipment itself is becoming more advanced, but you’re still selling tangible, manufactured goods, and there will always be a demand for fitness equipment as long as people want to lose weight or stay in shape; even so, if your business wants to grow, or stay alive among the competition, you need more sales to do it.
Being able to write a business proposal is a basic skill every entrepreneur should have.
Unfortunately, that’s not always the case. There’s a lot that goes into drafting an excellent proposal, and your boss likely won’t take the time to outline what that is for you. If you’re tired of having your business proposals rejected, there are some things you should know.
1. You must understand the client.
There’s no way you can help to outline a solution to a problem if you don’t have a clear understanding of the client’s problem and what they want from a good business proposal. It’s rare that you’ll know exactly what the client wants right away if you’ve never worked for them before, but as you continue to draft your proposal, you’ll begin to gain a clearer idea of who they are and what they want.
The best way to come to an understanding of a client and their needs is through conversation. Talk to them about their concerns, operating policies, management philosophies, and anything else that’s relevant to your project. If there have been previous attempts to reach the goal you’re working towards, you can use that information to shape your proposal into something they need before they even realize it.
2. Clearly outlining the solution is the most important part.
The purpose of writing a proposal is to outline a solution to a specific problem. It’s as simple as that, but it’s surprising how much attention is placed on other parts of the proposal, detracting from the solution.
The solution should be clearly stated. It should begin with a concise statement that says what should be done and provide an easy-to-follow plan for accomplishing it. By the end of this section, the client and the stakeholders should have no questions about how the changes will alleviate their problems.
3. Never forget the header testimonial.
This might seem like an extra, but it’s actually a very important part of making a good impression on your clients. Your header testimonial is typically comprised of a quote from a past or existing client who has worked with you and your products and services before. The quote comes near the beginning of the proposal and supports your ability to get the job done, and it functions to grab the attention of your prospects in order to entice them to continue reading.
When it comes to getting good testimonials, Alex Turnbull, CEO of Groove says, “Good testimonials aren’t fluffy; they communicate very specifically the type of person the testimonial writer is and the type of problem they’ve been able to overcome. This helps readers put themselves in the storyteller’s shoes.” This kind of testimonial is exactly what proposals need to get off the ground running.
4. Make sure the scope of work is accurate, even if it’s not impressive.
Every proposal includes a section about the scope of work, namely the time frame it will take to get your solution underway. One mistake many proposal writers make is underestimating the time frame in order to make the proposal look more impressive. They will soon realize that your time frame is off when it takes longer than the stated amount, which won’t impress your client in the least.
Always be realistic about the time frame, even if it looks unimpressive. As long as you thoroughly describe the reasons behind the extended time frame, and the reasons make sense, it will make an impact on your client.
5. Outline the investment for the sake of the stakeholders.
If investors have read through your proposal up to this point, it means you’ve gotten their attention, so it’s now time to give them the details of your business model. They want to make sure the investment they’re about to make is a wise one. Details should include a description of product sales, licensing, services, advertising, salaries, rent, inventory, maintenance, and anything else that applies to your business model. Assumptions should be listed and justifications given.
All in all, these investors want to know how much they stand to make through your proposal and when the money will start. Their biggest concern is going to be cost, so make sure you’ve detailed this section of the proposal very well.
6. It’s a competition.
You’re likely not the only company presenting a proposal. Keep in mind that it’s a competition, and you should treat it as such, particularly if you’re the underdog. “If your competition is a company that is much larger than yours, then you've got to show your strengths,” says Shervin Freed in his book Writing Winning Business Proposals. “Maybe you specialize in the client's field or can focus intensely on solving their problem.” Either way, keeping this perspective in mind is essential to outshining your competitors and securing the deal.
7. Play up the benefits.
Of course, you must outline the weaknesses of your proposal to keep it realistic, but that doesn’t mean you should state the weaknesses only. As a general rule, make the benefits look much stronger than the weaknesses. You can’t hope to win over the client if your proposal makes it sound like the disadvantages far outweigh the advantages.
8. The opening statement is like a first impression at a job interview.
Treat the opening statement as you would the first sentence spoken in a job interview. It should be courteous, intelligent, and show your enthusiasm for working with the client. Take the opportunity to thank the prospect for the opportunity and show your vast interest in providing a solution for their need. It should be concise, polished, and clearly represent what your company does.
9. You need to be qualified to write the proposal and be able to show it.
At some point, your qualifications are going to come up, and you need to be able to show that your company is the best for the job. This should be based on your competitive strengths and the past experiences you’ve had. Highlight your talents, experiences, and other qualifications throughout the proposal so the prospect has no reason to doubt your credibility.
10. Make it shine.
Once the entire report is compiled, it should be polished in order to remove any errors. It should also be attractively formatted with a professional edge for excellent presentation. For every grammar and formatting error the reader finds, you’ll lose points as far as credibility and competency go.
Contact iQuoteXpress for a Free Software Demo
There’s a lot that goes into writing a successful proposal, and it’s not always easy to handle the process on your own. If you start to feel overwhelmed with your responsibilities, it might be time to look into using software that will automate some of your processes. The software at iQuoteXpress can help you automate processes like financial estimations and data collection. Our software can help make proposals hassle-free. Contact us today if you’re interested in more information and a no-obligation, free, online demo of our specialized software.
While it may seem like a straightforward process to an outsider, writing a business proposal is actually a very nuanced task with tons of different rules and requirements. If you want to experience success and increase the chances of your proposals getting accepted and read, then you need to avoid the following deadly mistakes that often set businesses back.
1. Not Doing Your Due Diligence
The biggest mistake you can make is not doing enough due diligence on the prospective client. Before sending any proposal – no matter how big or small – you should know the business like the back of your hand. You should be able to recite their mission statement, rattle off core values, name their clients and customers, and identify key decision makers.
The problem a lot of businesses have when writing a proposal is that they feel like it’s only important to understand which products or services the prospect sells. While this is certainly a component of understanding the prospective client, you need to dig much deeper. What are their work ethics? Which philosophies drive growth? What does the company depend on to meet year-end goals and objectives?
In order to understand all of this, you’re going to have to do more than run a couple of Google searches. You’ll need to do some investigative work and talk with current and former employees and clients. If you know anyone in the same industry as the prospect, speak with them, too. If you can’t talk about the company for more than three or four minutes straight, then you don’t know enough.
2. Writing a Lazy Executive Summary
Few components of a proposal are as important as the executive summary. Since many companies receive dozens of responses to RFPs – many exceeding 10 or 15 pages in length – they often rely on executive summaries to weed out the good proposals from the bad. If your executive summary is an afterthought, your proposal will essentially be an afterthought in the eyes of the recipient.
What does a bad executive summary look like, you may ask? Well, it’s long, dense, and vague. An effective summary is concise, digestible, and to-the-point. Don’t delay in getting to the main point: why you’re the right choice. This should be evident within the first couple of sentences.
3. Focusing on Price Over Value
While price is definitely an important component of a business proposal – it’s not the only component. If you’re spending too much time discussing dollars and cents, you’re obviously not spending enough time talking about value. News flash: the latter is more important than the former to most companies. Certainly mention price, but focus the majority of your proposal on value.
If you enter into discussions with the company, there will be time to flesh out pricing details. When trying to convince a company to work with you, though, value is what’s most important. How are you going to make them better? What do you do that no other competitor can do? Why are you right for the job? The answers to these questions are most important.
4. Making Grammatical Errors
Writing isn’t everyone’s strong suit, but unfortunately, it needs to be. In order to be looked upon with respect, you must be capable of stringing together coherent sentences without making grammatical errors.
According to Emphasis Training, a UK-based business-writing consultancy, careless mistakes tell prospects, “This person can’t write” or, “This person doesn’t care enough to check what they’ve written.” While it may not seem like a big deal, a proposal filled with typos is destined for the trash.
Never submit a proposal without having at least two other sets of eyes review it. Ideally, you should have a professional copywriter take a look, but this isn’t always possible. Just make sure the proposal’s writer isn’t the only one checking for errors.
5. Not Paying Attention to the Deadline
Deadline proposals exist for two primary reasons. First, businesses need to collect all proposals by a certain cutoff date in order to have time to sort through them and make a decision. Second, businesses use deadlines to weed out responsible vendors from irresponsible ones. After all, if you can’t meet a proposal deadline, who’s to say you’ll ever meet a project deadline?
In order to meet proposal deadlines, you need to avoid procrastinating. Start well in advance and keep the process moving. As the deadline approaches, anxiety and stress will set in – which seriously inhibits your ability to concentrate and produce. By knocking the proposal out well in advance, you don’t have to deal with these same problems.
6. Leaving Out Social Proof
Any proposal can make a claim. However, very few proposals have the factual information and data to back up these claims. If you want your proposal to stand out against the myriad of other competitors, then you must find a way to incorporate elements of social proof into it.
In order to avoid making your proposal’s copy too dense, include these items at the end. Attach things like spreadsheets, survey results, and referrals. The more factual proof you can provide, the more professional you’ll look.
7. Ignoring the RFP’s Requests
Companies send out RFPs for a reason. They want to receive highly targeted responses that satisfy their particular demands. They aren’t looking for generic proposals. Always review an RFP very carefully before responding. You should address each and every question/concern/issue they bring up. If they didn’t want to know something, they wouldn’t have mentioned it. Keep this in mind and be thorough with your responses.
Contact iQuoteXpress Today
iQuoteXpress is a web-based SaaS application that’s been strategically designed to enable businesses – such as your own – to automate and streamline the proposal process. Our proprietary solution lets you securely store contact and proposal information online, accelerate the writing process, and gain a competitive advantage.
If you’re interested in learning more about iQuoteXpress, please don’t hesitate to contact us today. We’d be happy to provide you with a free, no-obligation online demo of our advanced software platform to show you what it can do for your business.