Everyone enjoys paying less than originally expected, and no one likes to pay more. Using this knowledge to your advantage can strengthen customer loyalty.

"We usually estimate on the high side, because I'd rather come in under budget than over budget," says Paul Benjamin, owner of the Benjamin Co., a public relations and advertising firm, in Hadley, Mass. "If you underbid on purpose just to get a job, you're going to have to justify an increase later," he adds. And that leaves a bad taste in the customer's mouth.

By estimating on the high side, Benjamin can come in below his estimate about 40% of the time, creating plenty of happy customers. "And when we charge less money than expected, they will often turn around and use the savings to hire us to perform some other work for them," he notes.