4 min read
Most people price by guessing what the competition charges and shaving a bit off. That sets a ceiling on what you earn and tells the customer the only thing that separates you is money.
Start from the year, not the job
Decide what you need to take home over twelve months, then work backwards. A year has 52 weeks. Take off holiday, bank holidays and a fortnight for illness and quiet spells and you are realistically looking at 44 working weeks. Not all of those are billable: quoting, invoicing, buying materials and driving fill a surprising amount of a week.
If you bill four days out of five, 44 weeks gives you roughly 176 billable days. Divide what you need to earn, plus overheads, by that number and you have your day rate floor. Anything below it is costing you money to turn up.
Count the overheads people forget
- Van: finance or lease, fuel, insurance, tax, MOT, servicing, tyres
- Tools: replacement, calibration, hire for the occasional big job
- Insurance: public liability, and professional indemnity if you advise
- Registration and certification fees, and the training to keep them
- Phone, accounting software, and whatever you pay to get found online
- Pension, because nobody else is paying into one for you
Quote the job, not the hour
Hourly pricing punishes you for being quick and invites an argument about how long something should have taken. A fixed price for a defined piece of work moves the conversation to what the customer is getting. Be explicit about what is included and what is not, because that is where disputes start.
Give three options where you can
A single price is a yes or no decision. Three options, with the one you want to sell in the middle, turns it into a choice about scope. Most people take the middle. It also gives a price-sensitive customer somewhere to go that is not a discount on your best work.
Do not discount, reduce scope
If a price is too high, take something out rather than cutting the number. Dropping the price teaches the customer that your first figure was not real, and anyone they recommend you to will expect the same.