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How to estimate the cost of a job as a contractor depends on a few key factors, whatever your trade or line of work.
The key is experience, so here’s a guide to pricing up jobs, plus a free quote template.
It doesn’t matter what trade you’re in, how to quote for a job is a fundamental part of running your business.
Potential customers these days are likely to be time-poor and markets tend to be demand-driven. Prospective customers will want to know right away how much their dream extension or emergency plumbing work is going to cost.
Ideally, you’ll be able to take an enquiry and then price a job within a day or two, and if it’s a bigger job, try to visit the customer and discuss an initial project outline.
They’ll still want an estimate and a follow-up pricing quote, but running through a project in person establishes trust and allows you to see what shape the project will take and its potential risk factors.
Below are the basics you need to plan for when working out how to quote a price for a job.
Download your free quote template that you can edit yourself.Download
From market conditions and materials prices to your local competitor rates, it pays to understand what can affect your costs.
First, you need to look at the economy in general, and whether there are widespread issues that could affect your customers’ budgets and appetite. For example, the cost of living crisis means customers could get more price quotes than usual as they’ll be looking for the best possible deals.
Second, it’s important to understand whether there’s anything impacting your specific trade or market that could drive your prices up or down, such as:
Check that your website, brochures, and other marketing materials are up to date, with any new prices added – there’s nothing worse for a customer than reading a guide price, only to see it shoot up when you quote the price of the contract.
Make sure you’re up to speed with the latest on the materials, parts, and labour you’re working with. Doing a full inventory every few months is a good idea, so that you know where the peaks and dips in costs may lie further down the line.
There have been a range of issues impacting the price of resources in recent years, from Brexit and Covid-19 to the war in Ukraine and the cost of living crisis.
The price of resources, availability of labour, and reliability of supply chains have all fluctuated during this period.
While you may be aware of who your competitors are and what they do, do you know what they’re charging customers, and whether this is above or under what you’re offering?
People may have a rough outline of costs on their website or printed materials, but that really just gives you a guideline.
You might not want to ask people outright what they’re charging, but check in with friends and family on the quotes they’re getting.
Check online review sites and social media for discussions about price. Build a relationship with your suppliers and ask about any trends they’re seeing, or drop-offs in orders.
There are three crucial things to think about when considering the premises or site for the job:
For example, if you’re working out how to price a decorating job and the customer is a couple of streets away from you, easily accessible through a ground floor front door and conditions aren’t a problem, you won’t need to factor much into your costs.
On the other hand, if you’re looking at how to price a job in construction and the site is an hour’s drive away, down a narrow rough track, and the conditions are challenging, you may need to reflect these things in your costs.
The key part of most cost plans and quotes rests on your resources. What do you need to get the job done? This isn’t just about paint, sand, tools, and stock. It’s also about your staff – do you need to take on an extra pair of hands? Bear in mind that if you do need to employ someone, you’ll need to factor in their pay and things like employers’ liability insurance.
As soon as you’re confident about the brief or job from your customer, draw up a full list of everything you’re going to need to complete it, and the cost to you.
Use this to create your quote, marking up and down where sensible and remembering to add on a percentage cost for waste and your service (see below for a basic cost structure example when working out how to quote for a job).
There’s nothing like working out how to price up a job for the first time.
Learning as much as possible from each project is what will give you the most accurate, attractive, and profitable quotes in the business.
So note learnings as you go and learn what to watch for, which suppliers to trust, and where to draw your boundaries – it’s better to say no to a job than take on a project that turns out to be more trouble than it’s worth.
This basic cost structure is designed to help you work out your first draft. You’ll need to add to it and take specific advice from an accountant though, depending on your trade and market.
Hourly rate x hours estimate
+ cost of materials (with waste/service percentage) + % for overheads (business insurance, transport costs, etc)
£12.07/hour x 28 hours
+ £150 in materials
£542.96 = total cost
Sense-checked quote = £540.00
Once you’re happy, build in a margin for things to go wrong, and provide a schedule for your customer so that they know the plan for the project and when they can expect certain milestones to be completed.
For more information, check out our article on how to become a painter and decorator in the UK.
What are your top tips for pricing a job as a contractor? Let us know in the comments below.
Conor Shilling is a Copywriter at Simply Business with over two years’ experience in the insurance industry. A trained journalist, Conor has worked as a professional writer for 10 years. His previous experience includes writing for several leading online property trade publications. Conor specialises in the buy-to-let market, landlords, and small business finance.
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