Pricing and Quoting Your Work

Know what the work really costs you

Start with the costs people forget. Labor is more than the hourly wage: it includes payroll taxes, workers’ compensation, paid time off if you offer it and the time spent driving, loading and cleaning up. Equipment wears out. Vehicles burn fuel and need repairs. Software, insurance, licenses, phone and advertising all land on the business whether or not a job closes this week.

Add those up over a year, divide by the hours you can really bill, and you have an overhead cost per hour. Many owners are shocked by it. If you can only bill thirty hours of a forty-hour week, which is common, your true cost per billable hour is higher than the number on your timesheet.

Build the number three ways, then compare

Build every quote from the bottom: materials plus labor plus overhead plus profit. Then check it from the top: what will the customer compare this to, and does the price sit inside a range they can accept for the result you deliver? Finally check it from the side: what did similar jobs actually cost you last time, including the surprises?

When the three numbers disagree, trust the one built from your own costs. A price that wins the job and loses money has not won anything. If the market will not pay a price that covers your cost, that is information too. It may mean the job is wrong for you, or the way you do it needs to change.

Write the scope so the price means something

A quote is a promise about what is and is not included. The arguments that sour jobs almost always come from a scope that was vague: “paint the kitchen” leaves open whether it includes ceilings, trim, cabinets and moving the furniture. Write it down. List what you will do, what materials you will use, what is not included and what you need from the customer.

Give a time frame, a payment schedule and an expiration date. Prices move with materials, and a quote that is good for thirty days protects you when supplier costs jump. Many owners add a simple line stating how changes are handled, which brings us to the part everyone dreads.

• What is included, in plain words
• What is not included
• Materials and brands, where they matter
• Start date, finish estimate and what could change it
• Payment schedule and how changes are priced

Change orders without the argument

Customers add things. Hidden conditions turn up behind walls, in systems and in files. Neither is a problem if you have agreed how to handle it. When something changes the scope, stop, describe the change, price it, and get a yes in writing before you do the extra work. A text or email counts if it is clear, and a signed change order is better.

Do this every time, including for small things. The first time you do extra work for free “just this once,” you have set the price of everything after it.