How to tell if a quote is accurate
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04/30/2012 - Contracting 

How to tell if a quote is accurate

When it comes to hiring a contractor, using a handy-man, getting repairs done or to purchase a product/service, how can you tell if you are being quoted an accurate amount/rate?

If you are like many people, you may have simply agreed with a given quote &/or used an educated guess to determine it.  However if you want to know how to find this for real, you should follow my father's "rule of 3's".

It's a process, by which 3 things need to be done & there are 3 steps in each part.  In the end, you should have 3 or (hopefully) more quotes which are roughly the same, that you can use to for the baseline price.

  • Step #1 - Scope of product or service:
    You will need to determine the scope of the project, task, product or service you are looking to pay for.
    - On paper, clearly state in a single sentience, what you are looking to do/accomplish/purchase.
    (i.e. get front breaks repaired on your car)
    - On paper, clearly state what you expect of the project, task, product or service.
    (i.e. replace break pads, cut rotors, top-off break fluid, work includes full parts & labor)
    - On paper, clearly state what your time frame is.
    (i.e. same day drop-off & pick-up)
  • Step #2 - Contact companies:
    Contact several companies to get quotes
    (you will need the info from step #1 to get the quote process rolling with each company) 
    - obtain 3 company recommendations from friends/family/co-workers & call them for a quote
    - find 3 companies from online resources & call them for a quote
    - select 3 companies from the phone book & call them for a quote
    (make sure each company is different, so you get the maximum # of possible quotes)
  • Step #3 - Review the results:
    You now should have quotes from the majority of the companies contacted; but some may opt to decline providing a quote over the phone.
    - look over the quotes you received & see if you have 3 or more quotes for a similar amount.
    (if not, contact 1 more company from each of those 3 resources & add it to your other quotes)
    - now if we have 3+ like amounts, take those similar quoted amounts & average them for the baseline amount it should cost.
    - you now know how much it should cost & can handle things accordingly.

At this point your done...  But what's nice about this method, is that beyond knowing the true cost, you can use the info to help better select a vendor for said product/service; as this will help you can eliminate companies that under/over charge.  Companies that severely undercharge, could be a sign they may cut corners or their company/practices may be questionable.  Companies that severely overcharge, may be attempting to take advantage of uneducated people (i.e. try to rip you off) or may not be adhering to the scope of the product/service you actually desire.

* NOTE: this method is not fool proof & cannot be used alone to determine if a company is sound or not.  It also does not cover any incidentals or things you may have overlooked (i.e. like if the car's rotors are too warn to be cut or are severly warped, and must be replaced) .  But it will help hedge your bets & get you a decent baseline price; since you are dealing with so many independent companies -- so you will get a very good idea what it should really cost.  However the best thing you can do for yourself, is to is perform your own research, learn about what it takes to accomplish that given task/project & to determine the cost of all parts & labor for the job.  You should also check out a selected company's reputation online & with the BBB.  Lastly, follow up on all referrals & review their prior work, if possible.  This is especially important when dealing with expensive projects. These things will help get you a good price & better help select a quality company.

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