A lot of contractors feel that the only way for them to win more bids is to just drop the price. And doing this leads to them having completely outdated prices that they just can’t profit at anymore. Well that is not the right way to win more bids and if you follow that, you’ll be working more time just to make less money. So we’re going to teach you everything you need to win more bids without having to undercut yourself.
So firstly what makes a good bid? It’s simple, profitable, and quick to make. That is all. The majority of the work to win more bids actually comes before you even make the bid. But before we get into that, let’s cover how to make the bid itself really good.
Your bids should be simple, don’t overcomplicate it. Just show the scope of the work, what the price is going into, and set clear expectations.
A profitable bid should sit between 50% to 60% gross profit margin, depending on your industry this can look differently, but generally, under 50% you probably don’t want to win that bid.
And finally a good bid is quick to make. Setting up a system to make and send out your bids as soon as possible can be really helpful to improve conversions. So sit down one weekend and figure out how to send bids out as quickly as possible.
Now with the basics out the way let’s get into the strategy. The number one thing we want to avoid is to be compared to others. That’s when the undercutting really starts.
The key is to figure out what sets you apart. There is almost always something that you might do better than others or make much more convenient or valuable to your customers; and if you don’t then you’ve got a big issue on your hands.
Once you’ve determined that factor, you need to lean into it. Price around that, market around that, and sell around that. Make it known that you do provide that extra value by showing direct proof and branding your business around it. (Brand is much more than your logo, it’s how your customers and other people perceive you)
Now that we aren’t being compared to others, it’s really important to price correctly so we can capitalize on it. Like we said before you want to price at around 50-60% gross profit margins but the most important thing with pricing is to stay out of the middle at absolutely all costs. Either be the most or least expensive, choose a side.
When you’re the cheapest it’s easier to make more sales but it’s much harder to profit on each job.
When you’re the most expensive it’s super easy to profit a ton on each job but it is harder to make sales.
You can see that either extreme has a clear strength that overcomes its weakness. With being the cheapest, getting in tons of jobs is not that hard, so even though each job is worth less to you, you can still make a lot of money. Being the most expensive makes it harder to make sales but with the extra resources from the extra profits, you can get better sales and marketing.
The problem arises when you’re priced in the middle. Here you have a hard time getting in a ton of sales since you aren’t the cheapest anymore but you don’t have the resources to overcome that challenge. Leaving you with not many jobs and barely any profit on each job.
So stay out of the middle and keep your gross profit margins above 50% if you want to be priced properly.
Finally let’s get to the most important part of not just winning more deals but winning the deals that actually make a difference. That’s lead flow.
Not every bid is worth winning, but when you don’t have enough leads coming in it feels like you do have to win every single one.
Focus on bringing in as many opportunities as possible rather than on winning as many opportunities as possible. This will make your life much easier as you’re chasing the right thing. Getting bids that aren’t profitable do not help your business, they hurt it. So focus on having as many options as possible so you can choose the right ones.
We actually helped a few contractors fix that exact issue so if you want to watch a replay of that session you can watch it right here:
Always so helpful! Very responsive. Super professional. Great information and advice for growth!!!