Estimating the cost of a job depends on a few factors whatever trade you may be working in. It becomes easier to price jobs once you have more experience under your belt. Being able to quote jobs correctly ensures your company will continue to run efficiently. It’s key to remember to get the balance correct in not overpricing or under-pricing jobs, where you as the tradesman could potentially be left out of pocket.
An electrician can be put under pressure from potential customers to provide a quote on the spot as people are generally time poor. Ideally, an electrician would visit a job and provide a cost one or two days later. However, with people wanting quotes immediately combined with the amount of competitors out there vying for business, it’s important to have an idea of cost of materials and your hourly rate. This way you can prepare and calculate effectively without the added pressure.
To help you offer the best prices for customers, we have put a guide together.
Price of Resources
As mentioned before, it’s a good idea to have rough knowledge of the prices of parts and materials and the length of time it takes to work with these parts. Also, considerations need to be made for bulk buying prices or purchasing in smaller amounts from suppliers as this will have an effect on prices.
Remember to keep in mind materials can fluctuate in price all the time. Copper wire can change over time and geographically. Keep a number of suppliers in mind to see who offers the best price for materials in line with the particular job.
This should always be at the forefront of your mind. It’s good business practice to not just know who you’re competing against but also what they are charging and quoting customers.
If a customer has been shopping around, asking them outright what they have been quoted can give you figures to work with and lets the customer also receive the best price for the quality of work they will receive. Don’t be afraid to ask this question as it could put you in a better position and shows you have their best interests in mind.
Factoring where you will be based for the day or coming weeks will have an impact on your travelling costs too. Make sure the price of fuel or transport is included in the costings so they are covered.
Scale of the Job
Assessing the scale of the job is important. Knowing whether it is too much to take on or if the job will take a few weeks can have an impact on the price. Within this, it’s essential to consider whether tools will need to be hired for the job as these will need to be factored into the price. Judging if the job will require an extra pair of hands will need to be filtered in as you will need to include the following; pay, employer’s liability insurance and workplace safety.
Understanding market conditions will help you offer the best price. Looking at the economy in general to see if customers are spending money or if they are cost-cutting will enable to you price according to their budget.
Having awareness of the local and regional electrical market will give you the upper-hand when providing quotes. If you are the only electrician in the vicinity you will have a majority share of the market and will hopefully be in demand! However, if the market is saturated with electricians your pricing will need to reflect this and be competitive.
Other considerations that will drive your prices up and down will be the potential changes to tax import duties, employment law (if required) and changes in regulations.
Handling your Time
Managing your diary will enable you to handle your jobs effectively. This will generally come with experience as you start to understand how long each job will take you. However, it’s good practice to tell your customers when you will be able to work on a project and if for any reason you get a cancellation you can bump your next customer up. This will show that you’re keen to work on the job and get it completed for them.
Take each job as a learning experience. Once you have quoted and worked on a few electrical jobs you will begin to gain a better understanding of your own pricing structure.
You will learn what jobs are the most profitable and the length of time it will take you to complete different workloads. As time goes on, you will become more confident and will be able to provide correct quotes to customers and know which jobs to turn down if you have to.
Within this time, you should be able to build a good solid reputation for yourself and your business which should always mean you’re busy!
We hope this guide is useful and you will go out into the industry prepared and ready to work on different electrical projects.