On a small business forum the other day a member complained that a new customer had wanted to view a supplier’s invoice.
The issue was that there was extra worked needed to be down by an outsourced supplier. The customer had not asked for a quote before the work was completed. When the final invoice was presented it contained the cost of the outsourced work and included a percentage the business owner added on for his time.
My guess is that the person had not told the customer that for any outsourced work he adds a fee for his time and the new customer probably wanted to know how much was the fee.
Another explanation is that the customer may not have had any idea the cost of such work and therefore his expectation regarding the price may have been a lot lower.
Good communication with your customers is essential if you do not want pricing problems to occur and ways to avoid the problems include:
Be Open
Nothing upsets customers more than to be hit with surprises. Explain or detail your pricing to your customers, especially new customers and if you add fees to outsourced work then tell them. Also it is a good idea to be upfront with your payment terms, warrantees, refunds etc.
If the project needs extra work outside of the brief then ensure you explain what this will cost the customer. This is especially important if they need the job completed urgently and additional charges are incurred.
Provide Quotes
Where possible have customers sign off on quotes and include what the quotes cover. This saves time and possible your money (if they refuse to pay) if there is a dispute. If you can’t provide a quote at least give the customer an estimate. Some businesses like to add 10% or 15% to the estimate to cover any unexpected costs that may arise.
If the job comes in under estimate, pass on the saving to the customers as this will be a pleasant surprise and promotes goodwill. You may also find that they will use that saving to brief you on another project.
Be Proactive
Don’t leave it up to your customer to always ask for a quote or estimate. As per the example the trouble probably would not have risen if the business had told the customer the cost of the outside work. Also remember customers may not have any idea as to the job costs as usually they see the end result, not the hours of hard work you have put in.
If you are upfront with your pricing and keep the customer informed then you usually find invoices are paid on time without any hassle.
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