Proposals – Marketing and Sales – Woodworking Design Software

Some time back I did a survey to determine how woodworking businesses went about the work of submitting proposals.  We asked several questions of nearly five hundred self-identified woodworking professionals and this is what we found.    Around 10% of those surveyed responded.

The first area of interest had to do with how much work went into doing proposals.

• How many projects does your shop submit in an average  month?
• How much time on average does it take to prepare a bid?
• How many bids are required to win a project?
• Do you use a design consultant?

Just about 70% replied that they submitted less than three proposals per month; 30% at one per month and 30% at two per month.

When asked about how many bids were submitted for each job won.  38% said they win half their bids.  20% said that they win the job once out of three or four bids.  15% replied that they win every bid.  Now what the comments show in this area is that winning depends on a lot of factors.  Those who win every bid seem not to really bid – but get agreement that the customer wants what the builder said he or she would build.  Some comments included ‘depends how busy I am’ – indicating that the price quoted is flexible and related to winning percentages.

Only 10% of the responses said they use a design consultant.  They do so when the customer requires it, the job is very complex, or if an architect is involved.  Some woodworkers did report having steady relationships with interior designers who feed them their jobs.

• How much time on average does it take to prepare a bid?
• What cost per hour do you charge for design time?
• Do you add the cost of the design time to your bid?
• Do you get paid for the design if you do not win the contract?

Regarding time taken the answers were all over the place.  We threw out the extremes (a few minutes and 48  hours.  [ NOTE:  I’m not saying this is highly scientific and by now you should have noticed that the percentages don’t all add to 100.  Some of that difference is no response or ‘other’ as a response.   This is more of an observation of proposal / bidding practices than an exact  study!]  All of that being said — I would say that the rough average of the responses seems to be in the area of eight hours.  Again comments like “Depends how much I want the work” or “Depends how complex” and “Depends on how busy I am”.  It makes sense.

Answers to the question of charge per hour ranged from $0-$150 per hour.  Other types of answers again included design time was cost at a percentage of the job depended on the complexity of the job.  While the range started at $0/ hour and went to $150 / hour the average charge per hour for design time, as best as we can calculate, was just under $60.

One half of the respondents replied they do add the costs for the design time if they win.  25% do not add the design time.  In 25% of respondents answered “it depends”.  100% of the responses said they do not get paid for design time  if they do not win the job.

Because I sell SketchList 3D – woodworking design software I wanted to know how the woodworkers prospects viewed the use of 3D images in the proposal.

• Do your prospects come to you with 3-D images?
• If your prospect does have a 3-D image of the project they want is it helpful to you?

These 3-D images might have been generated at Lowe’s or Home Depot.  [One of my favorite comments to this question came from a cabinet maker who said “My customers don’t go in that sort of place”.]  A common source of images, as one person pointed out, is  photo cutouts from a kitchen design magazine.  23% of the woodworkers answered that prospects have the 3D images.    41% of the respondents said their prospects do not have 3-D images.

55% of those responding said it was helpful for the prospect to have some sort of 3D images.  11% said no.  The “other” and no “response” answers counted for the rest.

It is interesting, from the SketchList the point of view anyway, that 55% of the responders say that 3-D image is helpful, yet 3-D images are available only 23% of the time.

Summarize???  2 bids per month win 1  jobs per month and take 16 hours to prepare.  The cost is $1040 per month of which about $520 is ‘lost’ by not charging for proposals.

Now if you look at the Proposal Cost Calculator on my web page – you’ll see a theoretical cost per bid in the $850 range.  My hours per bid totals 14.25 – but as I break the proposal down into steps — each step seems reasonable in terms of time assigned.  But still there is a difference.

There are explanations for the differences.  One – my numbers are way off.  Or two – woodworkers really don’t have a handle on the time it takes to do a bid —  their responses are ‘best guesses’ at that moment.  Three – a lot of the ‘proposal work’  (drawings, making parts lists, material layouts etc.) is done in the shop after the contract is signed.  (Danger there.)  Probably the truth is somewhere in between all of this!

The main point is most woodworkers need to submit proposals to win jobs.  Not to at least think about a proposals steps, time, or cost means a critical part of the business may be out of control.

Now this post only address time and expense of proposals and indirectly how they affect your bottom line.

It does not cover the additional value that high quality images, proposals, and having accurate numbers add.  Not to mention the value of winning a few more bids per year because of the quality of your proposal.

Download our proposal template from our site – Contractor’s page.  Use it if you like it – it’s yours for free.