How to price a job as a contractor

Being a self-employed contractor gives you a distinct competitive advantage. There are many things outside your control, such as the inevitable rise or decline in material costs, but you also get to be your own boss and determine your own prices and rates.

Having so many things to think about as a contractor can be overwhelming at first, which is natural, especially if you’re just starting out. When it comes to how to charge as a contractor, there are a few factors to bear in mind.

What to consider when producing a job quote?

A job quote, as the name implies, is something you give to a potential employer or customer to indicate how much the job will cost. To be as accurate as possible, you must itemise your estimate when determining how much to charge as a contractor.

Job quotations must include a lot of information, and they must be 100% accurate—for the sake of both your organisation and the potential employer. You need to consider factors such as:

• Where the work will be performed.
• The personnel required to execute the task.
• The time required to complete the task.
• Any travel expenses that may be incurred.

Pricing a job can be daunting, especially if you’ve only recently started working as a contractor. It will take time and practice to perfect your method, but there are some fundamental measures you can take to ensure you’re estimating as accurately as possible.

When you give a quote, you’re estimating how long it’ll take you (and maybe a crew) to finish work within a given time range. You must double-check your statistics; otherwise, you will not be paid what you deserve or need. And in that case you will not be able to raise the price later.

It’s not impossible to revise a customer’s quote, but you’ll need to meet with them again to make sure they agree to the new pricing. It’s preferable to be accurate the first time so you can get in, finish the task, and be compensated for your time and effort.

Quoting Jobs: Best Practices

Based on your previous experience, you should have a good idea of how long it takes you to accomplish various tasks that make up the job you’re estimating. That knowledge is a strong basis for how much you can estimate straight away, as long as there aren’t any further surprises on the job.

If you need more help, you should also consider how much it will cost to employ others to help you finish the project. To avoid overpaying or underpaying someone, you must provide a reasonable rate that corresponds to the skill level of the employees you need to hire.

Travel expenditures must also be considered. The last thing you want to do is estimate how long it will take you to go to the site without factoring in the expense of petrol. The further the site is from your base location, the higher the travel expenditures, which should include daily hotel charges for you and your staff if necessary.

Always do the math to ensure the figures are as accurate as possible. Check your numbers again after you’ve double-checked them. You’ll be able to spot any errors that may have occurred earlier in your total and receive your final figure.

Finally, stay on top of the market. Know your rivals and how much they charge – don’t necessarily cut your prices but keep up with what your competitors are charging. It keeps you competitive.

How to Determine the Cost of a Contractor Job

At first, pricing a job may appear daunting, but practice makes perfect. Keep an itemised list, especially when you’re first starting out, to ensure you don’t forget anything important that needs to be factored into the overall price. You want to make sure you’re paid fairly and that you’ve offered a reasonable price to your customer.

Your job quote must include the whole scope of work that is being estimated. We’ve already discussed how important it is to consider job location, but there are other things to consider as well. You may opt to charge only based on square footage, which is appropriate for things like deck installation if you are familiar with the technique and supplies both inside and out.

You should also include the cost of materials in your calculations. In fact, keeping a list of all the items you’ll need to finish the task will make it easier to keep track of the cost, allowing you to immediately add it to your estimate without having to produce a guestimate.

Other things to think about are:

• Limitations on time.
• Existing damage or items that will make completing the mission difficult.
• If you’re conducting standard or specialised work.
• Taxes and profit. If you don’t account for taxes in your budget, you’re likely to lose a lot of money.

Taxes will be deducted from every material purchase and labour wage, so keep that in mind and make sure it is incorporated into your pricing. By adopting this approach, you’ll have a clear image of your projected profit rather than simply an estimate.

It takes time and effort to learn how to charge as a contractor. But once you’ve gotten the hang of it, it’ll be like riding a bike—instinctive and no longer daunting. Keep your work bids and estimates precise and reasonably priced compared to others in your sector, and you’ll start getting repeat customers and word-of-mouth referrals sooner than you expect.

Strategically pricing your services is a critical part of building and managing a successful small business. While working hard on growing your contracting business, let us lend a hand by taking care of your business insurance*. BizCover offers insurance solutions for all kinds of contractors, giving you peace of mind coverage with no dramas.