4 minute read
Your business
How to price work and get paid
One of the most difficult challenges for any sole trader or small business is pricing, but you need to get this right if you’re going to be profitable. Mark Krull, from Logic4training, provides his top tips.
The logistics of calculating job costs can be a difficult balancing act, especially at the start of your career. Providing a good service for a reasonable price is key to winning work, but how do you manage to make a decent profit without selling yourself short? The following essentials will help keep you on the right track.
What to consider when pricing work
Consider the four main elements: labour, materials, profit and contingency. A thorough assessment of the work that needs doing is essential to putting together an appropriate quote. Talk to your customer to understand their needs and manage expectations. Hidden extras and misunderstandings never go down well, so get as much out of this initial visit as you can.
It’s good practice to put together a list of questions that you’ll ask with every job. Make sure you take accurate measurements and consider any labour-intensive work.
Site visit checklist
• Make an appointment and confirm it • Be on time • Be tidy • Show your Gas Safe Register
ID card • Be respectful at the door and in the house • Listen • Give a timeframe for the quote and stick to it.
Working out your hourly rate
Consider how many days you work every year, how many hours you work each day and the number of days you might take as holiday. Research what similar tradespeople in your area earn and then use these figures to work out your hourly rate. You don’t need to disclose this rate to your customer, however: just give them the price for the job.
How long will it take?
If you’ve got lots of experience doing similar jobs, this can be a fairly easy task. But if you’re relatively new to working for yourself, it’s easy to underestimate how long a job could take. Adding an element of contingency is important as it means you have some breathing space and can avoid upsetting the customer with additional costs.
Things to consider
• Remedial tasks: lifting and re-laying floorboards, for example, can be really timeconsuming. Check for possible asbestos materials. • Time: how long does it take to travel to and from the site? • Accessibility: are any areas particularly difficult to access?
Can you easily transfer your tools and equipment on to site? • Sub-contractors: will you need to call on other trade professionals to complete the work, eg, asbestos removal, scaffolding, electrical or building work?
Keeping an accurate record on a spreadsheet that compares your estimated materials to what you actually used will help you improve your quotes in the future.
Get a deposit
Paying for materials upfront is a costly risk that many sole traders or small businesses can’t shoulder. Don’t be afraid to ask for a deposit to cover materials, particularly with new customers. Mention this at the outset.
Creating an account with your local merchant will mean you are billed monthly, as well as getting preferential rates.
Marking up
Many tradespeople mark up the cost of materials to cover the time they spend sourcing, buying and transporting them, particularly for bigger projects. Taking advantage of trade prices at your local supplier should mean that your quotes will be competitive after even you’ve added your mark-up.
The quote
Make sure your quote includes a detailed breakdown of costs, for labour and the materials involved, plus methods of payment, terms and deposit information. This will help the customer make an informed decision, avoid any nasty surprises and provide a record of the work.
Your customer will probably have received a number of quotes, so yours needs to stand out. It must demonstrate professionalism, an understanding of the job’s requirements and your expertise. Detail will help convey these messages, as long as they’re clear – but baffling people with jargon could be confusing and offputting.
Make sure your quote shows your company’s details clearly and don’t forget to check your spelling. There are loads of software tools designed to help small businesses and sole traders with quoting and invoicing. Using these helps you to create formatted documents, so that you look professional and save time.
Get paid
Getting paid is the most important bit, so make sure you state your terms of payment (usually 30 days) clearly on your invoice, together with your bank details. You can also use an app that turns your smart phone into a card payment machine so you can get paid straight away.
And finally… know your worth. When costing jobs, one of the biggest mistakes you can make is to get into a price war with a competitor. ‘Cheap’ is not the main selling point for most customers: they would prefer to employ a trustworthy tradesperson who will do a good job, on time, within the agreed price.
Attitude, professionalism, expertise, reliability and quality of work are very valuable traits, so be proud of the service you provide and don’t undersell it. ■
