Most contractors dread pricing, but there’s no getting around it, it’s essential to winning work. Anna Turner has some tips to improve your estimating game.
1. Embrace technology
Estimating and take-off software will change your life. They make pricing far more accurate and faster than using printed-off plans and a spreadsheet. I’ll break down the benefits of these in-depth in future articles.
2. Be organised
The first thing you need to do is dedicate time each week to pricing so you can stay on top of the quotes and get them out in a timely manner. This will also help to steadily feed that work pipeline.
You also need to have a system in place for pricing. Set this system up to ensure you don’t miss anything you need to price. I personally start by digesting the plans and writing down a list of items I need to price and a list of items that are the responsibility of other contractors. This second list is important to me because it ensures I digest the whole job and understand how it is going to be built. Every time you stop work for another trade it costs money and needs to be considered when pricing.
I try to price 90 per cent of a job in one sitting. I am a lot faster if I do it this way, because my head is in the game. Once I’ve priced as much as I possibly can, I make notes of the prices I need to chase and move onto the next quote. I then come back a few days later to chase missing prices (usually material and subbies’ quotes). This method allows me to be quick, price large projects in about 1one week, and helps me price multiple jobs at the same time.
3. Update prices regularly
It’s most important the prices used to quote are as up-to-date as possible.
At a minimum you should check all your regular pricing every six months. Most suppliers change their prices in January and July, so this is when I check my prices. However, over the past two years I’ve been spot checking all pricing every month. I think the market has calmed down a bit now, and I’m even seeing some prices drop slightly, so every month is probably not necessary.
4. Build a relationship with your suppliers
I believe it is super important to get to know the suppliers and subbies I’m requesting quotes off all day long. These guys can make my life very hard if they don’t come through with a price, so I’m grateful for the work they do. Building a relationship with them not only makes my day more ‘human’, it means they go the extra mile for me when I’m in a pinch. I couldn’t be more grateful!
5. Think to the future
This one is a judgment call, but if you’re pricing a project you know won’t happen for six months or more, you need to consider how prices, especially labour, might change over that time. Clients don’t like a price hike; it puts a bad taste in their mouth. Sometimes it is unavoidable, but if you can add a few per cent on top of the project for price increases then do it. However, always consider this in conjunction with how competitive you need to be. You don’t want your quote dismissed because you’ve gone in too high.
6. Make your offer clear
I cannot stress this point enough. You must be clear about what you are offering in your quote. Write detailed descriptions of how you intend to build each item and clarifications to clear up any discrepancies. Some contractors don’t like to do this because it makes it easier for the client to shop around and compare your quote to another. This is true, but the benefits far out way the negatives. Clear descriptions and clarifications protect you, because they clearly state your intent, and your intent is what you have priced. They also build your credibility with the client, giving them confidence to sign the contract.
7. Check your work
One of the most import steps when pricing is to check over the quote before you send it out. Check that you’ve not left an item out. Check your spelling is correct. Check the items against past projects to make sure the rates look about right.
I’m not a fan of rate pricing, but it’s good to check the rate once the item has been priced. Sometimes it will highlight a mistake.
The absolute gold standard is to have a colleague check the quote with you. A fresh set of eyes can spot mistakes and offer up cost saving alternative ways to do the work.
Essential
Estimating is an essential part of running a trade business, and getting it right is essential to making a profit. Spend a little time to set yourself up to price efficiently. It will make your life a whole lot easier and put a whole lot more money in your pocket.
To see more of Anna’s excellent business and management advice, search Anna Turner at landscape contractor.com.au.