As you create bids for your clients, you must carefully walk the line between giving them a great deal and securing a profit that makes it worth the effort. You have to weigh a lot of factors during the bid creation process to find an ideal rate for your work. After you establish an hourly rate and learn to quickly identify material costs, your ability to create accurate and competitive bids will improve. Check out the following factors that will influence your bid totals.
Resist the urge to undervalue the time you have, and will, spend honing your craft. The years you put into establishing a solid skill set add to the value of the work you perform. You must base your set hourly rate on your total years of experience and supplemental skills, like welding and woodworking. As you gain more experience, remember to boost your hourly rate to reflect your commitment to the industry. You will need to estimate the total expected hours required to complete the job and multiply it by your established rate to determine your labor cost.
You use your personal fund to establish and maintain the structure of your business throughout the years. You pay for a license, bond and insurance that allow you to operate in a safe and legal manner. Advertising fees for flyer creation and distribution, business card production and website maintenance also quickly add up. You need to work a small percentage of these costs into your hourly rate to offset these business upkeep expenses.
Of course, there are many direct expenses associated with each job. Since the expenses are often unique to each job location and task requirements, you will need to tally up the costs each time you create a bid.
Lumber, hardware, paint, insulation, flooring and all of the other materials required for the job must be added to the bid to create an accurate cost sheet. Since you source and deliver the materials to the jobsite, it is appropriate to add a handling charge to the supplier's cost. Add all material prices and handling fees directly into the bid as an itemized list.
Any tools required beyond your base set of equipment adds to the cost of the job. If you are faced with acquiring a new tool to perform a specialty task, you must decide between making a purchase and securing a rental. If you take the rental option, simply add the fees to the bid. Otherwise, you will need to break up the purchase cost over several jobs that require use of that tool.
You may have to pay out of your own pocket to purchase, maintain and operate a work van that can transport both tools and materials. You may also need to equip the work van with a number of racks and shelves to keep your supplies organized during the drive. It is an acceptable practice to work your transportation costs, especially fuel expenses, into your bid.
Calculating Your Bids
After you establish a fair hourly rate, your labor calculations will come quite easily. From there, simply add in all of the direct expenses to create an accurate and competitive bid. Remember to add taxes onto the bids to maintain a specific profit percentage for each job.