Setup pricing for long term jobs.

[bigben]

We mostly do interior signage. Sometimes, we have to quote a job before the building is up, and it can take up to two years before we do the install. I currently estimate the price increase of materials and our shop pricing for the next two years when I do the quote. However, it seems some competitors don't take this into consideration and quote their current price. I would like to get some opinions on how you would manage this to see what other shops generally calculate.

 

[ProSignTN]

Consider quoting at current cost at a much shorter time frame: 60 days, 90 days. Include a contingency built into the quote for future increases. Just about every quote I've ever produced or viewed had a thirty day limit.

 

[bigben]

Consider quoting at current cost at a much shorter time frame: 60 days, 90 days. Include a contingency built into the quote for future increases. Just about every quote I've ever produced or viewed had a thirty day limit.

Our quotes are good for 30 days. The problem is the customer accept the job within that time but the install can be scheduled for over a year later so they can built the building. By then, materials and labor prices has increased. How do you deal with this?

 

[unclebun]

If the job is beyond the time limit for the quote you need to make sure that the quote says the job will be repriced according to then-current materials and labor pricing if it is ordered at a future time.

 

[bigben]

If the job is beyond the time limit for the quote you need to make sure that the quote says the job will be repriced according to then-current materials and labor pricing if it is ordered at a future time.

They sign the contract within the 30 days of the quote. But the building is not up yet. It can take over a year before they are ready for me. I would understand if they were accepting the job one year later, but I'm in the same boat as the painter for example who quoted at the beginning but the job is done when the building is up.

 

[unclebun]

I guarantee you that the people putting up the steel, pouring the concrete, installing the interior and exterior trim, the glass, and doing the painting have cost overrun clauses in their contracts. For some reason there's this idea that sign makers can't do this but the fact is you are a building contractor just like the rest of them, and price increases are a way of life for them. You do have to be able to prove the cost increases, so you need to keep documentation of the material costs at the time you make the initial quote and when you give them the cost increase price.

 

[bigben]

I guarantee you that the people putting up the steel, pouring the concrete, installing the interior and exterior trim, the glass, and doing the painting have cost overrun clauses in their contracts. For some reason there's this idea that sign makers can't do this but the fact is you are a building contractor just like the rest of them, and price increases are a way of life for them. You do have to be able to prove the cost increases, so you need to keep documentation of the material costs at the time you make the initial quote and when you give them the cost increase price.

Interesting. I will look into this. I'm in Canada, so maybe it's different.

 

[damonCA21]

Add 20% to your quote. This will more than cover any increase in costs over a year. The customer will be happy as they are paying the price agreed, and you know you won't lose out

 

[bigben]

Add 20% to your quote. This will more than cover any increase in costs over a year. The customer will be happy as they are paying the price agreed, and you know you won't lose out

Does 20% is a bit steep? Since we are few shop to bid on this kind of contract, I need to find the sweet spot between been competitive and not loosing my shirt. This is why i'm asking what other shops do in those situations.

 

[damonCA21]

You can always lower it to 10 or 15% - just enough so you won't lose out if prices increase.

 

[AES_TLS]

You should include an escalation clause in your contracts for these long-term projects. I started doing this because predicting vinyl or substrate costs two years out is impossible. Just state that material costs will be adjusted based on the market rate at the time of the actual install.