Taken from https://www.yourtradebase.com. Running a building or construction business is hard work. Make sure it pays by ensuring you're pricing building work properly.

1. competitively
How to price building work
competitively
(... and still earn money)

2. This article originally appeared on www.yourtradebase.com
https://www.yourtradebase.com/blog/price-building-work-competitively-still-earn-money/

3. Getting pricing for building work right is
difficult
Here’s a 5-step guide for working out what you should be charging for your next job...

4. Step #1. How Much detail to include with your
builders price?
Work out the importance - and size - of the job and decide how much detail you’re prepared to invest
in it. More detail =
● Increased customer confidence
● Disputes more easily resolved
● Sanity check for you that everything is included
● Comparisons with other builders can be put into ‘like-for-like’ context

5. Step #2. What goes into your pricing?
To get to your price, you should understand the formula for pricing:
Let’s break that down...

6. Step #3. Know your labour costs
Knowing your labour charge is simply placing a price on your time.
That’s where hourly rates become a valuable tool.
Having an idea of your hourly rate will make working out your labour a very easy task…
But how do you know what to charge per hour?
HINT: Calculate your hourly rate: https://www.yourtradebase.com/blog/5-steps-to-calculating-hourly-
rate/

7. Step #4. Work out (and markup) your materials
Create a list of the materials you’ll need to complete the work and include the total cost into your
quote.
Don’t be afraid to markup the materials – after all, you should factor in the ordering, selecting and
handling of those materials in your pricing.
If you’re happy with your customer purchasing materials, then make sure you include a hourly charge
for drawing up the list for them to buy.
And make it clear on your estimate or quote which materials are included.

8. Step #5. Don’t forget: Profit is Sanity
Turnover is vanity, profit is sanity, cash is reality.
You’re in business to make money, so profit has to feature when working out your building work price.
Factor in your fixed overheads and admin costs. Here’s a handy guide for doing so:

9. BONUS: Never get into a price war
Avoid competing on price with your competitors at all costs… A race to be the cheapest is no way to
run a business!

10. Takeaway: Create value and your price is not
important.
If your perceived value is greater than the perceived costs,
your customers will be motivated to act.
Create value.
You’re working to earn money. Make sure you have a pricing system for your building work to
make sure work is worth your while.