Before you lock Q4 prices, update the costs that can change

You are about to send a Q4 quote. Before you lock the price, re-run the cost lines that can change. Price from the current cost, not last month's assumptions.

A quote built on old numbers can look safe until the customer says yes. Then the work arrives, the bills arrive, and the margin is gone.

This is a money problem before it is a customer problem. The customer sees the final number. You see the line items. If the line items have moved and the final number has not, the business pays the difference.

Energy is the line most likely to move. US fuel oil prices rose 74.2% over the 12 months to September. US vehicle fuel prices were up 34.2% over the 12 months to September and up 9.1% in September alone. US energy inflation rose 20.4% over the 12 months to September.

The broader price trend is moving too. US annual price growth was 3.7% in September, higher than the 3.4% rate for the 12 months to August. US consumer prices increased 0.6% from August to September. US core inflation, which excludes food and energy, was 2.6% on an annual basis in September.

Old costs make new quotes look safe

When a customer asks for a quote, the fastest move is to pull the last one. That move is dangerous when the inputs have moved. A price that covered the work earlier may not cover it now.

A quote captures the cost of doing the work at a point in time. The longer the gap between the last quote and the new one, the more likely the cost has moved.

If materials and fuel are now more expensive, the old price still looks familiar, but the cost is higher. That difference is the margin you just gave away.

Re-run these five lines before you send a number

Keep this checklist next to the quote. Each line takes a short check if you have the last bill or the last quote in front of you.

• Fuel and energy. Compare the latest fuel, electricity, or heating bill to the one used in your last quote. If it moved, rebuild the price.
• Materials. Check the current supplier price for the main inputs. If the unit cost changed, update the quote line.
• Labor. Compare wages, overtime, and any required benefits to the labor cost in the last quote. If the hours or pay rate moved, rebuild the price.
• Taxes and regulatory costs. Check for new fees, permits, insurance requirements, or tax changes. If a required cost is new or higher, add it.
• Overhead. Compare rent, software, phone, internet, and other fixed bills to the last quote. If the monthly cost moved, spread it into the price.

The test is the same for every line: compare the current bill or supplier price to the number used in the last quote. If it moved, rebuild the price. Run the checklist every time a quote is old enough to have missed a bill cycle. A recent quote may be safe. An older quote may not be.

Rebuild the price from the current cost

Once the lines are checked, add the current costs together. Then add the margin you need to keep the business running. If the total is higher than the old quote, the price should move too. When two lines have moved, add both before you send the number.

If the cost moved only a little, the margin can handle it. If it moved enough to change the margin, the price must handle it. Put the current cost on the page, add the margin, and send the new number. A clear quote protects the relationship more than a low number that creates a loss.

If you are asking whether to raise prices, start with the cost sheet, not the customer's reaction. A small increase that follows a real cost move is easier to explain than a large one that arrives after the margin is gone.

Do not wait for the customer to notice the cost increase. A quote is a promise about what the work will cost. If the cost has moved, the quote should move before it is signed.

This article is general information, not tax or financial advice. Consult a qualified professional about your situation.