A Contractors Look at Pricing and Profit from Every Job

A Contractors Look at Pricing and Profit from Every Job

Access Doors and Panels on 16th May 2018

A Contractors Look at Pricing and Profit from Every Job

As a contractor if you are starting off in the industry the hardest first step is pricing your work and your value. For some they believe that their success in the first few years means having cheaper prices than their competitors; however, this isn’t always the case. Starting off low can actually ruin and hinder your business possibilities – which is why, pricing accordingly is important to make sure potential clients and your competitors know you are in it for the long haul.

As a contractor, you are a jack of all trades for your business but also the services provided.

When it comes to pricing your jobs while ensuring you are still turning a profit – there are a few basic things to consider.

How much are you going to get paid? What is your salary – ideally. It can seem counterintuitive to give yourself a salary without having started any jobs or knowing what to charge everything else; however, this is a good starting point. Once you have determined a reasonable salary for yourself you can guarantee that no matter the job you will get paid – as it is important that as a business owner and an employee you still get paid, whether it’s a loss or gain at any given job site. Remember, when you are starting off – the key to this is determining a reasonable dollar value and not over-confident. Factor in business trends and the market you are catering to.

Once you have determined what your salary is going to be, the next thing is to calculate overhead – or what it will cost to operate the business before a job begins. This means calculating any equipment – whether it be tools or office supplies such as toner and paper. Overhead is important to consider because here is where you find expenses such as a company car, office space, work gear (helmet, glove, padding, etc.) website and insurance.

One is salary and overhead costs are important to think about from the get go because they should always be considered when pricing a job. Which is where some start-up companies find their shortfall – they think that by giving great discounts that they will attract more jobs; however, that is not always the case.

Clients will pick businesses based on reputation, quality and then costs – because when it comes to renovations and designs, these are works that no client is willing to spare an expense. Imagine being a client and seeing that a “new” contracting company is only charging a flat rate for a basic insulation install. Depending on the size and area of the room, one can estimate how long it would take them but what happens if you work longer than expected? What if there are delays? It is important that when pricing you factor these potential scenarios and have contingency plans because at the end of the day, you do not want to promote yourself as a below average type of company from the get go.

In that previous example we presented the idea of a flat charge – once you have your basic expenses (salary and overhead) now it is time to price your jobs. Determine what tasks are billable and which aren’t. When determining which tasks should be billable, consider determining how much you will be charging per hour. The basic math to this is taking your salary and overhead then picking your profit margin. From there you would divide by how many hours you intend to work. This will give you a basic picture of your hourly rate – and remember, just because you give yourself a salary in the beginning does not mean you can’t go back and play with the numbers.

The final thing that as a business owner and contractor can do to help increase your profit is doing some research. Research in knowing who your competitors are, how many are there in the area you are servicing and what are they charging for services. Knowing what others are doing can help you determine how to market your business to attract clients that may choose your competitors over you. Maybe your company offers the same services; however, you offer a free consultation and follow up along with clean-up, while this may seem basic and ordinary it can mean hundreds of savings for the client.

Research, while it may be slightly time consuming is one of the best investments you can do for you and your company. Don’t be afraid to see what is out there and make your brand and business stand out. From having an online presence on social media to a community one – clients consider these as reasons to go with a particular company over another.

For helpful tips for the budding entrepreneur and contractor, visit us atwww.accessdoorsandpanels.com/blog

16th May 2018 Access Doors and Panels