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How You Can Stay Profitable when Pricing a Job

Before presenting a proposal to your client, one of the most important things to consider is how this project will turn out in the long run. You have to factor in the fundamental need to turn a profit because all jobs have to add to your bottom line.

It is not always easy to price jobs, especially if you don’t have years of experience dealing with a variety of clients. While established contractors might have an easier time pitching projects to clients, remember they all had to start somewhere.

Here are some useful tips to help you pitch proposals, and earn healthy profits, which is the reason you’re in business, after all.

Introduction

When going after a contract, it is always a good idea to make sure that you are offering the client what they need, while at the same time getting what you need. Contracts and job offers involve a lot of give-and-take, especially where services, instead of goods, are changing hands.

Bear in mind that your client’s ultimate goal is to get as much as possible from you, while your goal is to develop a long-term working relationship with the client, and clock up a nice profit for your business.

By following these simple steps, you’ll ensure you don’t lose the contract before you get it.

Cost of Labour

One of the most common challenges facing contractors doing estimates is the difficulty putting a price on the cost of labour. Established contractors tend not to have this problem, but beginners often struggle with it.

The problem in most cases is, they look at the job as a whole instead of dividing it into parts. When you break your job into milestones, you can come up with a plan, and work out the costs you can expect to incur at every stage until project completion.

Labour

Another benefit of breaking down your project is it affords an eagle-eye view of the project, allowing you to make a better presentation to the client.

Remember, clients don’t need too much information; they need facts, figures, deliverables and time schedules. Flowery words will just make you look like a chancer who doesn’t know the game.

Having broken down your project into parts, you’ll find it easier to apportion costs to each task. Make sure you also plan for contingencies so you won’t have to abandon the project midway if things don’t go according to plan.

Abandoning a project will cost you dearly and generally set you back. Not alone will you lose the project, you will lose the client, along with their network of potential referrals

Insurance and Licences

When planning your client presentation, you’ll need to factor in insurance and any licences required. Trade licences are not always cheap but you risk breaking the law if you proceed without them.

Having professional licences and certifications in place is just common sense – a minimum requirement – so you don’t need to mention these to your client during a job proposal. Remember, clients only want to work with professionals, so cutting corners could easily render you an unattractive prospect in the client’s eyes. Licences also boost your credentials so that’s also something to bear in mind.

Some of the licences you need might include:

  • Business permit
  • Fire permit
  • Air and water pollution control permit
  • Sign permit

Factoring in the costs of licenses is easily done because they are normally paid on an annual basis.

Variable Costs

When planning your presentation, consider what variable costs you might incur. It is important to look closely at these so you can accurately gauge how much the project will cost should certain factors change.

Some of the more obvious variable costs include:

  • Fuel consumption
  • Tolls
  • Parking costs

Variable costs

Remember, you normally can’t put a fixed price on these so budget accordingly. For example, should petrol costs escalate, you won’t have to worry about making a loss if you’ve factored this into the price.

Also, calculate how much fuel every vehicle will consume for the duration of the project. Assuming you have been doing this for some time, it is easier to predict, but you will still need to pay attention to the calculation

Equipment

Specific equipment will be required to carry out the project from beginning to end so think about what you already have and what you will need to acquire.

Your main concern around the equipment you own will be the cost of moving it to your client’s job site. Running and maintenance costs should also be taken into consideration.

If you need additional equipment, you will need to calculate leasing costs, as well as the costs of getting this equipment to the job site.

You might get a sub-contractor to take on some of these costs, or get tools from them and do the job on your own. Whichever option you choose, make sure you factor in these outgoings when drawing up your proposal.

Conclusion

When pitching a job prospect to a potential client, you’ll need to have your wits about you. If you’re struggling to price your services at a level that will generate a profit while keeping your client – and bank manager – happy, these tips will make all the difference. Tried and tested over the years by tradespeople who have lived to tell the tale, use them and pass them on.