ESTIMATING AND BILLING:  How we quote electronics

The Proposal

We use the Proposal to quote electronics costs for our customers.  The proposal starts with a 1-2 hours interview with the customer where we define the intended use of the boat and the customers’ personal preferences.  The intended use of the boat and the customer preferences then determines the electronic equipment that is selected for the boat.  For example, a day sailor will not get the same electronics as a boat that is going to circumnavigate.  A boat used only on weekends will not get the same package as a live aboard or extended use vessel.  

There are 3 elements of the proposal. They are Proposal Detail, Proposal Summary, and Outside Labor costs.  The sections below describe these 3 elements and why they are required.  

The Proposal Detail  -  This element is one difference that sets us apart from other electronics companies.  The amount of time required to draft this element in the proposal is significant and probably the main reason other companies do not have this element in their proposals.  Customers’ knowledge levels of marine electronics vary significantly and the proposal detail helps the customer to see the capabilities of the electronics that will be installed.  We divide the total package into sections and show the cost of each section so that the customer can decide which section they want or don’t want.  For example, if the customer decides not to put a SSB radio on the boat, we can easily delete that section from the proposal and the customer can easily see the new cost of the package by deleting it from the proposal summary page.  The proposal detail page also lists where the electronics will be installed and how each section integrates into the other sections that make up the entire package.  We use the proposal detail to develop the data drawings and the power source documents that will be used to perform the installation. 

 

The Proposal Summary   -  The Proposal Summary lists all of the sections from the detailed proposal on one page so that the customer can see the total costs of the installation.  Outside Labor Costs  -  The outside labor costs are listed here so that the customer can see the true cost of the installation by adding the outside labor costs to the total that is listed on the proposal summary page.  After a proposal is drafted, it is sent to the customer for review, with a request to contact us at the customers’ convenience to discuss in detail all of the available options.  It is during this conversation that we will explain our quoting and billing policies and make any necessary changes to the proposal.  The revised proposal is sent to the customer for final review.  The proposal is a fluid document and changes are almost always going to occur.

 How we charge for electronics 

Our objective is to complete the job under budget.  Our invoice to the customer will list all of the costs associated with completing the installation.  These costs are the parts required to perform the installation, any outside labor charges, sales tax, freight, and the actual labor hours that it took to complete the job.  We usually reach our objective by using the billing policies listed below.

Parts required

We list all of the parts required to complete the installation on the invoice.  This is usually a line-by-line transfer from the Proposal detail section of the proposal to the invoice with minor changes.  If a part is listed on the proposal, and it is not required to complete the installation, it is not billed.

Labor Hours

The way that we bill labor hours is another difference that sets us apart from other electronics companies.  We do not charge the hours estimated on the proposal.  We charge the actual labor hours that it takes to complete the installation.  We consider this a much fairer policy than holding to the number of hours listed on the proposal.  The proposal is broken into sections with the labor hours listed on each section so the customer can pick and choose the options they want so they can customize their package.  However when the systems are installed on the boat, they are essentially installed at the same time.  This usually results in a savings in labor cost to the customer.  

In the rare event of an overage of quoted Labor Hours, we’ll do our best to limit the amount of overage.  Any additions to the proposal or large overages will be discussed with the customer prior to the work being completed.   

Outside Labor We are a Marine electronics company and we rely on the expertise of outside labor to perform work that we feel is outside our mainstream business.  This results in a better quality product and allows us to focus on our work.  One exception to this rule is that we cut the electronics panels ourselves because an outside carpenter does not always match our degree of accuracy. We will provide copies of the invoices paid to outside labor and collect payment for the same amount.  We do not believe it is fair to “Mark–up” outside labor and subcontractor invoices.  This mark-up policy is common in the marine industry and we refuse to adopt this policy because it falsely inflates the cost of having the boat here.  We will manage the outside labor and we will charge only the time it takes to manage the job for the customer at our normal hourly rate.  Usually this is ½ or 1 hour that is added to the labor hour’s section of the invoice.  Because we do not have as much control over outside labor charges that we must bill our customers, we will typically quote a larger cost for outside labor than what the actual bill is expected to be.  However, the customer is always billed the actual amount of the subcontractor invoice.

We realize it is impossible to get all of your questions answered on the Web and that is not our goal, we hope your visit will be informative and we look forward to your calls and emails.  Please don't hesitate to call, write or just drop by; we'd love to hear from you.

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Lamplighter Marine Inc.
117 Moorings Drive
Lantana, FL 33462

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