In the eyes of some prospective clients, self-employed contractors lack the supposed pedigree of a more ‘established’ business. Running an enterprise as a sole trader is challenging enough, without the added difficulties of outdated and unjust assumptions like these.
Even so, this is why self-employed contractors need to be particularly mindful and strategic when it comes to pricing jobs. Not to mention, pitching proposals and presenting estimates to prospective clients.
Speed is often of the essence, as delayed quotations can paint a picture of an amateurish and/or unreliable contractor. Precisely where specialist quoting software like ZapQuote can help, which has been designed to reduce markup and quotation times by as much as 80%.
Ideally, self-employed contractors should be looking at pricing jobs by providing quotations no later than one or two working days after receiving an enquiry. For larger jobs, an in-person, on-site meeting with the prospective client should be arranged at the earliest possible opportunity.
Oftentimes, establishing trust and demonstrating your credibility is more important than undercutting the competition. Hence, it is the way you present your estimates and pitch your services that will make all the difference – not how cheap your prices are.
Still, the importance of coming up with consistently accurate and reliable quotations cannot be overstated. Apps like ZapQuote can make a real difference, but you still need to approach the pricing and estimating process in a strategic and regimented way.
All jobs are different, but the basics of putting together professional quotations that win projects are as follows:
1. Consider Market Conditions
First up, it is important to consider broader economic conditions at the time. If the economy is in something of a slump (as it is right now), you may need to adjust your pricing structure accordingly. At the same time, market conditions may be having a major impact on the costs of the materials and resources you need to run your business. Coupled with your own elevated operational costs and living costs, you may need to put your prices up simply to sustain your business.
Roughly translated – pricing up jobs as a contractor is not something that takes place in a vacuum. There are countless factors that can influence the affordability and profitability of what you do, which need to be carefully considered when pricing a job.
2. Conduct a Full Inventory
This is something you should be doing on a regular basis, as opposed to when planning a specific project. It’s good to know exactly what kinds of supplies and equipment you have on hand, so that you know exactly what you will need for any given job. As things stand, the impact of Brexit and the ongoing crisis in Ukraine is making it more expensive than ever before for contractors to stock up on essential supplies.
Anything you think you know about the costs of even the most basic resources could now be completely outdated. While conducting an inventory, take the time to research the current trade prices of the rest of the gear you will be needing.
3. Competitor Research
One of the quickest and easiest ways to come up with a basic ballpark figure for your own quotations is to find out what your closest competitors are charging. However, to use competitors’ prices as the sole means for quoting jobs for your own business is inadvisable. Their quality standards may be significantly lower than yours, or they may have the kind of buying power and manpower that enable them to complete projects for lower costs than you ever could.
Look for those ones operating at a similar level to you, and see what they are currently quoting their customers. Aim to undercut them by all means, but don’t go so far as to quote suspiciously low prices.
4. Location Considerations
Be mindful of the fact that the location where the project is to take place could also be a major pricing factor. What needs to be considered here is the distance you will need to travel to the job site, any potential accessibility issues, the conditions of the work site and so on. All of which could have a major impact on the time, effort and equipment needed to get the job done.
This is one of many reasons why an on-site visit at the earliest possible stage should be considered mandatory, so that you know exactly what you will be dealing with.
5. Basic Cost Structure
Lastly, it is a good idea to come up with something of a basic templated cost structure for your business. This way, you’ll know exactly how much the job will cost you, and how to provide an accurate quotation inclusive of your margin.
The basic calculation you should be looking to perform is as follows:
Hourly rate x hours estimate + cost of materials (with waste/service percentage) + % for overheads (business insurance, transport costs, etc)
The margin you will then be adding to the project will vary from one job to the next. There’s no specific rule as to how much you can or should charge, but the general consensus points to 15% to 20% of the total project’s costs.
A (modest) margin should also be included to cover against delays and disruptions, or if things go wrong along the way for any reason.
Additional Tips for Pricing Jobs as a Self-Employed Contractor
Depending on the type of work you conduct, there are several additional tips and guidelines that can help you price and win jobs.
For example:
1. When painting and decorating, clarify with clients any areas that they do not want you to paint.
2. Remember that clients may change their minds at the last moment, and you cannot get away with ‘punishing’ them financially for doing so.
3. Accessibility may be restricted by heavy items of furniture and fixtures, which may need to be moved and/or protected from damage.
4. If you plan to hire additional contractors or labour, you need to get fixed quotations in writing before you can price your job accurately.
5. Keep your quotations comprehensive yet concise, making them as easy as possible for the client to read and digest.
6. Be as honest and transparent as you can with potential timeframes, and avoid the temptation to overpromise.
7. Where possible, deliver your quotation in person, and take the time to run through it in detail with the client.
8. Last up, remember to factor in clean-up times and waste disposal, and ensure an agreement is reached with the client as to who takes care of cleaning up after the job.
