How to Price Jobs Without Losing Money

Most quotes start at the wrong end. You picture the job, picture what the customer will stand for, and write a number. Then you work out afterwards whether it was enough.

Build it the other way round and the number tells you what to charge instead of you telling it.

A price has four parts. Miss one and you have paid for it yourself.

1. What the job costs you to do

Materials, parts, consumables, hire, subbies, delivery, tip runs.

Everything that leaves your account because this job exists. Price it from a merchant list or a recent invoice, not from what it cost last year.

2. Your days

Decide what a day of your work is worth — say £250 — and put every day of the job in the price. Not just the days on the tools.

A five-hour install is not a five-hour job. Add the drive, the merchant run, the setting up, the clearing away, the trip back with the part that was wrong.

If it takes three days of your life, it goes in the price as three days.

3. A share of your overheads

This is the part most quotes miss completely.

The van, the insurance, the tools, the phone, the accountant, none of it belongs to any one job, and all of it has to be paid by the jobs you do. Nobody else covers it.

So work out the share. One year:

You work about 200 days a year.

£6,800 ÷ 200 days = £34 a day.

Every day you work has to carry £34 of it. A three-day job carries £102.

One thing that list assumes: that you are paying monthly for the van. If you are, replacing it is already covered — the agreement ends, you start another, the payment carries on.

If you own your van outright, there is no monthly payment in it. So add what the next one will cost you, spread over the years you will keep it. Say an £18,000 van, replaced every six years: that is £3,000 a year, and it goes in your list alongside the insurance and the phone. It will push your daily figure well above £34, which is the point of working it out rather than guessing.

Do that sum once. It changes every quote you write afterwards.

4. Profit on top

The first three parts pay everyone, including you. They do not leave anything over.

Profit is the bit that replaces the van when it dies, covers the fortnight nobody rings, and pays for the week off. Decide what you want it to be — say 15% — and add it after the costs, not instead of some of them.

Deciding what that figure should be for your business is a separate job: How Much Profit Should I Make as a Tradesperson?

Putting it together

A three-day job:

Profit is still the price minus every cost. Your share of the overheads is one of the costs, because that is what it is.

Now you know what that number is made of. If the customer wants it cheaper, you know exactly what you are giving up.

What "cheaper" actually costs you

Say you drop £200 to win it.

The materials still cost £600. The three days still take three days. The van still costs £34 a day.

So the £200 comes out of the £218 of profit, and there is £18 left. Three days' work, your wages paid, and £18 for the business.

Being the cheapest is a strategy. It is just rarely the one people think they are choosing.

The quote is a prediction. Check it.

Every price you send is a guess about how a job will go. The only way to get better at guessing is to look at what happened.

After a job, three things are worth knowing: did the materials come in where you thought, did it take the days you allowed, and did the profit survive.

Get in the habit and your prices stop being opinions.

Here is that check done in full on one job: How Do I Know If My Jobs Are Actually Profitable?

How Nule helps

Nule keeps the quote and the finished job in the same place, so the check takes a minute rather than an evening.

You build the quote with materials, outside costs and a buffer. When the customer accepts, it becomes a live job on its own. The estimate stays put, so there is something to measure against. You log hours, materials and receipts as you go.

End Job Insights show how that job turned out against the price you set. Business Insights show what keeps happening:

• which jobs lose you money
• where the same kind of work gets priced too low, again and again
• materials against your estimates
• hours against the time you allowed
• where your expenses actually go

A quote built on last year's guesswork repeats last year's mistakes. One built on your own finished jobs does not.

A price you can stand behind

The right price is not the highest you can get away with, and it is certainly not the lowest.

It is the one that pays for the job, pays for your days, pays your share of running the business, and leaves something over.

When you know what your number is made of, you can hold it in front of a customer without flinching.