- Add up what the job actually costs you.Materials, labour at a real hourly rate, and the travel and admin nobody counts.
- Add your margin on top.Not a guess. A number you have chosen and can defend.
- Then look at the market.If you are miles above it, you have a positioning problem, not a pricing one.
Example conversation with Cash & Profit
You
Quoting a bathroom refit. 5 days, 2 engineers on £280 a day, materials about £1,400, an hour each way travel. I was going to say £4,500. Is that right?
Cash & Profit
No, and it is closer than most people get, which makes it worse.
Your real cost:
Labour: 5 days times 2 engineers times £280 equals £2,800
Materials: £1,400
Travel: 10 hours of paid time you have not counted, about £350
Quoting and admin: roughly £200 on a job this size
Total cost: £4,750
At £4,500 you are paying £250 for the privilege of doing the work.
At a 30 percent margin you need £6,200. At 25 percent, £5,900.
The travel is what caught you. It always is.
Your real cost:
Labour: 5 days times 2 engineers times £280 equals £2,800
Materials: £1,400
Travel: 10 hours of paid time you have not counted, about £350
Quoting and admin: roughly £200 on a job this size
Total cost: £4,750
At £4,500 you are paying £250 for the privilege of doing the work.
At a 30 percent margin you need £6,200. At 25 percent, £5,900.
The travel is what caught you. It always is.
The number you would have quoted was below cost, and travel was the reason.
AvoidCharging what the competitor down the road charges.
Do this insteadKnowing this job costs you 420 in real terms, so 620 gives you the margin you need, and understanding why the cheaper competitor can go lower.
Copying a price copies someone else's cost base, which you cannot see.
Paste this to MAYA
I am quoting a job. Here is what goes into it: [materials, hours, travel]. Here is what I was thinking of charging: [amount]. Work out my real margin and tell me whether that price is sensible.
Try it on your business
Every lesson ends with a question to hand to a Greymill specialist, who answers with what it knows about your business.
More in Pricing and profit
- Is this job actually profitable?The one where the answer is usually no, and it is always the same type of job.Read the lesson
- Raising your pricesYou will lose some customers. That is usually the point.Read the lesson
- Writing a quote that winsThe cheapest quote does not always win. The clearest one usually does.Read the lesson