How to price a job

Pricing badly is the most common reason a busy trade business still struggles. The fix is arithmetic, not confidence: know what an hour of your time actually costs before you decide what to charge for it.

Start with your true chargeable hours

A full-time week is not 40 chargeable hours. Take off quoting, travel, ordering, invoicing, and the days nobody books. Many sole traders find they bill 25 to 30 hours in a typical week. Divide your annual overheads and target income by your realistic annual chargeable hours, and you have your floor.

Worked example

• Target income before tax: £45,000.
• Overheads — van, fuel, insurance, tools, phone, accountant, lead costs: £12,000.
• Total to recover: £57,000.
• Chargeable hours: 28 per week x 46 weeks = 1,288.
• Break-even rate: roughly £44 per hour before profit or contingency.

Day rate or fixed price?

Day rates suit unpredictable work — repairs, fault-finding, alterations in old properties. Fixed prices suit well-defined work you have done many times, and customers generally prefer them. Fixed pricing rewards efficiency: as you get faster, your effective hourly rate rises.

Do not forget these costs

• Materials, plus a reasonable handling margin for the time spent sourcing them.
• Waste removal and tip charges.
• Access equipment.
• Parking, permits and congestion or clean-air charges.
• Contingency — commonly 10 to 15 per cent on work involving old properties or hidden services.
• The cost of winning the job, including lead fees and quoting time.

Pricing to win, not to be cheapest

You will not win every job, and you should not want to. Winning every quote usually means underpricing. A win rate somewhere around a quarter to a third of quotes is healthy for most domestic trades. If yours is far higher, test a small increase.