How to price a job

You need to consider lots of different elements when you price a job. It helps to have a consistent and accurate way of pricing jobs. A pricing template can do that for you.

A job pricing template is a great way to start thinking about the whole picture. How to price up a job varies for every trade, but the core elements are usually the same.

A job pricing template isn’t the same as a customer quote. Think of it as your rough notes to help you create an accurate customer quote.

Benefits of a pricing template

A job pricing template helps you to bring together all the key information. You can then put the prices into a ‘tidied-up’ customer quote that doesn’t include all your workings.

Having the job pricing template in your back pocket can help if you need to discuss the job quote. For example, if the customer queries a figure then you can quickly explain and justify your calculations.

How you create a pricing template is a question of personal preference. Word and Excel are popular ways.

The good thing about a Word document template is you can easily print it out. You can then scribble on it, if that’s how you prefer to work. An advantage of Excel, if you are tech-savvy, is getting it to do pricing calculations automatically for you.

Checkatrade members get access to Powered Now to create professional-looking quotes with handy job quoting software. These also provide you with a record of how you have priced a job.

Why accurate pricing helps you make a profit

For your labour costs, be confident about charging an hourly rate that reflects your skills and experience. Different trades charge different amounts.

How to price up a job also involves spreading your business running costs across jobs. For example, consider charging for travel expenses, like mileage or fuel.

Factor in what you need to pay staff or subcontractors. You should also think about regular expenses like insurance and running costs overheads.

If you forget to include any of these, then you are likely to make less profit than you thought you would on a job. And don’t forget to include your profit margin.

Job descriptions

One way of using a job pricing template is to list every type of work you do. These relate to your trade so the template will vary between business types.

You probably won’t do all of them as part of every project. But it helps to list them all on your template. That way, you are less likely to forget to include everything that you need when you price a job.

You can have a blank template that you need to fill in afresh for every project. But this method is more challenging if your template used mathematical formula.

Labour hours and costs

To calculate the cost of labour, multiply the time you expect to work on a job by the rate you charge. Here are some typical rates for various trades:

• Builders
• Plumbers
• Painters and decorators
• Electricians
• Handyperson

As well as your labour costs you may have other people to pay. Labourer day rates vary depending on the types of skills you need.

You may already have a list of the approximate number of hours it takes you to do a particular job. If you haven’t, it might be worth creating one. This should make it easier and quicker for you to price jobs. It will also ensure you are consistent in the amount you charge.

You should regularly review what you charge to make sure it is still at the right level. It’s always worth seeing what your competitors charge. This will help you make sure you aren’t charging too much or too little.

You may be able to charge more if your trade involves seasonal work. Gas safety technicians and plumbers are busier during the ‘boiler turn-on season’ in the autumn. Tree surgeons and gardeners have their busiest periods during the spring and summer months.

Surcharges – your extra costs

Here is where you need to include all the work-related costs to get a specific job done that aren’t labour costs. These could cover:

• The cost of materials, remembering to mark up the price of materials if you need
• The cost of paying subcontractors or any other people
• Hiring equipment, such as cherry pickers, cranes, scaffolding or portable toilets
• Delivery of materials and equipment
• Any other sundry costs that you might need to pay to get the job done
• You may need to spend time researching different materials or the best way to do a particular job

Wriggle room – error and difficulty factors

Pricing jobs isn’t an exact science. Unforeseen costs can crop up. Unexpected changes in your initial costs could cause increases that you perhaps hadn’t considered. You could end up underpricing a job.

Once you have submitted your job quote to a customer it can be hard to backtrack and tell them that the price is going to be higher. Often, job quotes are valid for a certain number of days, for example, 30 days or 90 days. If your costs rise during that period it could be awkward to pass them on to the customer.

That’s why it’s important to build in some wriggle room when pricing jobs.

• One of the main areas is errors you might make – these are unforeseen costs that you have no control over (such as rise in material prices)
• Another area that needs wriggle room is what we call ‘difficulty factors’ – these are things that you can control, such as needing more materials or additional labour on complex jobs

If your wriggle room costs aren’t needed then the additional income can be handled in two ways.

1. You could keep it as part of your profit on a job
2. Offer your customer a ‘discount’ as the job cost less than you had originally quoted

The benefit of reducing the price to the customer could be in winning repeat business. Customers are more likely to be more loyal to tradespeople who they think have treated them fairly.

Overheads and profit margins

There are lots of other costs that you could spread across all of your jobs. These are general business running costs that should be spread across jobs. How you do this depends on you, but if you don’t recover these costs then they will reduce your profits.

Overhead costs can include:

• Office administration costs, especially if you pay someone to do this
• Other office and building costs, including light, heat, water and rent
• Transport costs, especially petrol and diesel. There are ways you can save on petrol costs
• Wear and tear of tools that you have to replace. For larger equipment, plant and machinery you will probably want to charge depreciation costs

A final, essential element when pricing jobs is to add in your profit margin. The profit margin is the amount you add on after allowing for all your costs.

The all-important profit is what you charge in addition to all of your costs. Some tradespeople calculate this on a job-by-job basis. This could depend on factors like the length and complexity of a job.

Others have a set mark up percentage that they use on every job, for example, 10%, 20% or 100%.

Key takeaways

• Pricing jobs accurately and consistently helps tradespeople be more profitable
• Labour costs are often the most expensive item when pricing a job
• Other costs – surcharges and overheads – should be included when pricing jobs
• Adding in wriggle room for unexpected costs helps ensure profits are protected
• Always remember to include your profit margin when pricing jobs