When pricing a job, there’s plenty to keep track of, however, there’s usually something that always comes into consideration: Always coming out with a profit. What are the key factors to making this happen?
Pricing a job on the cost of starting
It’s important to keep in mind the cost of actually starting a job. What this refers to is; how much money do you need before you can even begin the work?
What equipment do you need?
Sole traders or small companies often require equipment such as computers or hardware tools to work. if you don’t have them, you need to source them.
For manual labour or similar contracts, it’s smart to take into account any replacement tools too. You should also be thinking about the material in this case, such as wood, piping, or fittings.
Some projects require the use of computers or similar tools, ones that you use for multiple jobs. In this case, it isn’t the smartest idea to charge for a new PC every single time. However, you can charge for the use of your PC across multiple jobs. Take this into account when thinking about tools like screwdrivers, drills, or hammers too.
Always let the client know what they are being charged for. Clients want to know what they are paying for and this might be a large portion of the pay. When pricing a job with the equipment to start in mind, you should invoice and receive payment first. For more information on the types of invoices that might apply, you can read here.
Do you need to subcontract or pay employees?
You wouldn’t work for free, why would others? You need to make sure that you understand the costs involved in taking on help.
Subcontractors are excellent for small jobs and specific skill sets. For example, you might be hired to fix a website’s SEO score. You may then need to get help with creating new graphics or with the website layout. If you don’t, get the funding for this from the client, you cannot begin the work.
Employees are good for long-term projects and general work. You might find it cheaper if you have consistent, long-term work to have an employee. This still takes from your profits, so you need to account for their pay when pricing a job.
If the client hasn’t hired the help you need, then you may need to pay for it yourself. Always make this clear when pricing a job so that you can say where the additional costs are going.
Keep a timescale in mind
Contracts can last for a long time. Keep in mind the intensity of the work and the length it will go on for.
It’s important to keep in mind that you might not be able to work two contracts at the same time. This means that you need to price the job for the full sum of your time, knowing that you will only be paid from that contract.
You also might be working a contract for a very long period, potentially weeks. This can be the case for manual labour trades especially, such as carpentry or construction. Have a conversation with the client about the pay you need for that time.
The timescale can also refer to the potential hiccups when working, such as workers quitting. Be certain to cover these when you think of the length of a job so that you can cover them if needed.
Know your overhead costs
There are always extra costs when running a business. Wifi, office space, travel; all of these come under overhead costs and should be considered when pricing a job.
Some small companies believe that you should take the cost for these out of the earnings. However, you can very happily justify charging for something like office space when you need it to work.
Putting all of this into an invoice can be a hassle. In the busy life of a business owner, hassle just isn’t acceptable. Try out the Invoice24 app to see just how much of the admin is taken out of this process.