Most dealership owners in foodservice equipment know their close rate is bad. Almost none know exactly how bad, or which of the losses were avoidable. The figure quoted in private, 15 to 30 percent on competitive Division 11 work, is one of the worst-kept secrets in the trade and one of the least examined.
At a 20 percent close rate a dealership does the full estimating job on five bids for every one it wins. Five spec reads, five takeoffs, five rounds of quote requests, five reconciliations, five install estimates. The four that went nowhere never appear on a P&L line. They are buried inside estimator capacity, where nobody has to look at them.
This post is about what those four cost, the five different ways a bid fails, and how to tell them apart well enough to act.
Put a dollar figure on one win
The arithmetic is worth doing once, on paper, because the result changes how a principal feels about bid selection.
Start with the loaded cost of an estimator hour. A working foodservice estimator, in most markets, runs somewhere around $75,000 to $100,000, and payroll burden of taxes, insurance, benefits, and the seat itself adds roughly 25 to 35 percent. Call it $100,000 to $130,000 loaded. Spread that over the 900 to 1,200 hours a year the estimator is actually building bids rather than handling submittals and change orders, and an hour of real estimating costs between $85 and $135.
Now price a bid. Across a mixed year of small commercial jobs and full K-12 packages, call it six to nine hours per bid, and run your own number. Take eight hours at $110. One bid costs about $880 of estimating.
At a 20 percent close rate, every win carries the cost of four losses. That is roughly $4,400 of estimating labor per closed project, before a single piece of equipment is ordered. At 35 percent it is about $2,500. The fifteen-point swing between a mediocre close rate and a good one is worth close to $2,000 per win, and over a hundred bids a year that never shows up as a line item anywhere. Run it with your own salary figure and your own hours. The conclusion tends to survive the substitution.
Five ways a bid fails, and they are not the same
Calling a bid "lost" is too coarse to act on. There are five categorically different failures, and each one calls for a different response.
1. Wrong fit from the start. Never winnable. Spec written around a competing dealer's lineup. A project type the shop does not compete on. A GC with a preferred dealer for everything, collecting a third number for compliance. A go/no-go process filters these out, but only if the shop has one.
2. Lost on a price you never had. Even with perfect execution the winning number was below where you could land. A competitor buying market share, an out-of-region dealer with a structural freight advantage, a spec that rewards a line you do not carry. No internal improvement changes it.
3. Lost on a number you could have beaten. The painful bucket. A rep quote came in stale or never came, so an item went in at list. An accessory landed in the wrong line. An addendum changed eleven items and got caught with four hours to go. Execution cost a winnable bid.
4. Lost on the soft side. You were not low and the GC went elsewhere anyway, or you were not low and won regardless. Relationships, install reputation, references, and how painful you were to work with last time. Most dealers file these as price losses. They usually are not.
5. Won, then unwound. Selected, then the project died in submittal review, got re-bid, or went through post-award value engineering that gutted your scope. The win rate says you won. Revenue says otherwise.
A sixth case is worse than any loss: the bid closes on margin you did not actually have, because a quote was stale, a fabrication cost was a guess, or an install estimate missed a scope item. A 30 percent close rate where every win delivers its projected margin beats a 50 percent close rate where half the wins are erosion in disguise.
The Five-Bucket Loss Ledger
The diagnostic needs no software. Pull the last twenty lost bids. Put each in exactly one bucket, first-pass judgment, no deliberating. Add two columns: scope value, and hours spent. Then read the distribution.
- Mostly bucket 1 - the front of the funnel is broken, and it is the easiest category to fix.
- Mostly bucket 2 - the shop is competing outside its lane. Look at project type, region, and manufacturer lineup, not at the estimating process.
- Mostly bucket 3 - execution. The good-news bucket, because it sits entirely inside your control.
- Mostly bucket 4 - the number was never the problem. That is a sales conversation.
- Mostly bucket 5 - you are bidding work that is not real yet. Tighten qualification on funding and schedule.
The column that decides your next move is hours, not count. Twelve bucket-1 losses at four hours each is a smaller problem than four bucket-3 losses at fourteen hours each.
The standard responses all skip this step. Bid more, and the marginal bid is always a worse fit than the average one, so close rate falls faster than volume rises. Sharpen the pencil, and you win the bids you least want at the thinnest margin. Hire, and you win more of the wrong bids faster. Call the GCs, and you get "you guys were close."
The Ten-Minute Go/No-Go
The highest-return change most shops can make is refusing work earlier. Five questions, before the estimator opens the drawings, answered yes or no:
- Have we won work from this GC before, or is there a live relationship with someone on their team?
- Is the spec friendly to lines we actually carry, or is it written around someone else's catalog?
- Is the bid date realistic given what is already in the pipeline that week?
- Is the project type inside our normal scope, at a size we have delivered before?
- Is there a plausible path to being top three on price?
Two or more "no" answers and the package goes in the skip pile. The bids that flunk this were going to be bucket-1 losses. At eight hours and roughly $880 apiece, killing one bad bid a month pays for a lot. The usual objection, what if we skip one we would have won, is settled by the ledger: if the bucket-1 pile is thick, the filter is positive by a wide margin.
The leak that selection does not fix
Selection handles bucket 1. Bucket 3 is a different animal, and in most shops it comes down to one thing: quotes that arrive late, arrive stale, or never arrive. An item priced at list because a rep did not respond is a self-inflicted loss on a bid you were otherwise going to win. That is why quote follow-up eats margin, and it is the most consistent avoidable leak in the trade.
The other half of bucket 3 is reconciliation. Version drift between the takeoff, the quotes, and the addendum revisions is where items get dropped entirely. That is a tooling problem more than a discipline problem, and it is the core of the case against running the whole bid out of a spreadsheet.
Cost per bid is the lever nobody pulls
One move improves the picture without touching selection or execution: make each bid cheaper.
At eight hours a bid you have to be selective just to survive the calendar, and selectivity under capacity pressure is not strategic selectivity. You skip based on who is busy, not on who you can beat. At three hours a bid, marginal bids become worth a number, the go/no-go filter runs on fit instead of on panic, and the estimating cost carried by every win drops in direct proportion. The return math is not subtle at these numbers.
What to do this week
Pull the actual close rate for the last twelve months: bids submitted, bids won, and bids that won and delivered to projected margin. If that third number is unavailable, that is its own finding. Then run the Five-Bucket Loss Ledger on twenty losses and put the ten-minute go/no-go on the wall.
A 20 to 30 percent close rate is structural in this trade. Nobody bids their way to 80. But the gap between a shop at 20 and a shop at 35, on the same work in the same region, is the difference between an estimator who spends two-thirds of the week on jobs that go nowhere and one who spends two-thirds of the week on jobs that pay. Most of that gap is not skill. It is knowing which four of every five losses you are actually looking at.
That record is easier to keep when it lives with the bid. SmartTakeoffs runs the whole bid in one place, and that includes after bid day: each submitted bid is marked won or lost, with what the GC said about where the number landed.
