How to quote right and make a profit

How to quote right and make a profit blog

No matter what trade you’re in, quoting correctly wins jobs and drives profits. Competition is steep for trade businesses, and it’s important to know what you’re up against when bidding for work. Customers are always looking for the best deals, but you can’t provide unrealistically low estimates. You need to give quotes that cover all your costs and increase profit margins. To do this, there are a few crucial elements to consider.

Job duration

The first thing you must do is estimate how many hours it will take to complete a project. Start by mapping out all the steps involved in the job. In a kitchen renovation, for instance, contractors need to replace dated plumbing and lighting, paint walls, add flooring, and install cabinets and countertops.

Then, figure out how many people should be involved and estimate the time needed for each task. Make sure to set aside time to account for complications that may occur such as sick days and equipment failure. This enables you to negotiate sensible deadlines and makes it easy to calculate labour costs later on.

Labour

Labour costs are largely comprised of your workers’ hourly wages. Multiply those rates by the job duration to get direct cost estimates of the job. Next, add on other related costs such as benefits, overtime, and sick pay. Keep in mind that if you employ subcontractors for the job, you’ll also have to factor their pay and liability insurance into your estimates.

In addition to direct labour costs, you should account for indirect expenses, too. These are the wages of supervisors and administrators who play a pivotal role in the background. They’re responsible for project management, payroll, and other HR-related tasks.

Materials

An important part of quoting is evaluating the materials you’ll need for the job. These could include the amount of timber you need for a construction project, or electrical components for an AC installation. A good way to evaluate your material needs is to measure the site, take pictures, and jot down specific customer requests. When you’re confident with the quantities required, figure out the price per unit.

Note that prices fluctuate based on market conditions, which means you’ll need to look at historical data to quote correctly. Consider looking at online resources, vendor reports, and commercial references to estimate material costs as accurately as possible.

Rates will also vary depending on whether you purchase materials from big box retailers or wholesale suppliers. The latter often makes more sense for most organisations, but make sure to check shipping costs so you don’t drive up your estimates. Finally, you need to quote a margin on these materials to cover material wastages.

Equipment

Any equipment your tradies will need must be billed. If you operate heavy machinery such as cement mixers, you’ll have to add the cost of running and renting the equipment in your quote. You also have to add on a percentage cost for equipment depreciation or the accumulated damage to the equipment after being used for a project.

Location

Price estimates vary depending on the location of the job site. For example, a construction project several hours away from your headquarters will cost more than one just around the corner. This is because you have to transport workers and materials over long distances and, sometimes, rough conditions.

Jobs in highly urbanised zones like Sydney CBD will also affect your estimates, as wages and property costs tend to be more expensive. What’s more, other sites may have stricter regulatory requirements than others, which means increased overhead costs.

Utilise price books for faster quoting

Quoting correctly doesn’t have to be a slow and manual process. By creating a master record of all material and labour prices, you can quickly calculate cost estimates for various projects. It even makes it easy to add your markup so you can turn a profit.

WorkBuddy is a cloud-based job management app with custom price book features. You can log different service codes, materials, and labour prices into the system to streamline on-field job quoting. What’s more, you can preset and adjust pricing depending on the job type, timeline, and region. This means that no matter where the job is, you have everything you need to produce accurate and competitive quotes.

If your trade is losing to the competition because of unrealistic and late estimates, WorkBuddy is the perfect solution. The app lets you negotiate the right price upfront, avoid cost overruns, and win jobs. Request a personalised demo today to learn the full extent of WorkBuddy’s capabilities.

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