dummies guide to pricing?

[Czlowiek Drzewo]

Something i struggle with is pricing.

 

Ok For example if your expensies for a job are 200 for a day..then you are not going to be after 100 profit. around 350 profit is better i thinks!

 

If you your expensies for big 3 day job are going to be 3000...then you are going to be wanting more profit than usuall. prob around .2000.

 

I price day all small one day jobs on day rate, but bigger ones where i have to empty my account and wait 2 months for payment...i want to make it worthwhile.

 

Is this the correct way to price? does anyone have a pricing system they use?

[ukminch]

It's quite simple in the accounting world, unfortunately not so in real life.

 

Expenses and profit don't really come into the equation whereas cash flow does.

 

Say you want £100 a day then if your job is £100 expenses then you need to charge £200quid to make your money.

 

It doesn't alter on bigger jobs, but the risk does. The chances are the expenses are higher so the risk is bigger hence as your risking money you need to charge more.

 

Say 1 in 10 of the bigger jobs you don't get paid for that means you need you need to charge an extra percentage on the other jobs to cover it.

 

The other thing is how much is the money costing you whilst it's tied up, it can be frightening. If you've got savings then it's costing you 5 percent ish a year, if your borrowing it then it could be 40% before you've realised whats going on. Again these cost need to be applied to these jobs.

 

Then you need to work out how much stress is worth to you and again put it on the job......

 

Rob

[gibbon]

Theres no right or wrong way, just your system if it works. I could say how I price work, but seeing as I have priced 13 big take down jobs in the last 6 weeks and got none, you'd be better off not hearing it.

[ukminch]

Or maybe the competitor is buying work.............. Don't think there is a right or a wrong answer, all depends on you at the end of the day

[Mesterh]

Let me get this right, if you think a job will cost £200 (wages+all other expenses) then you will want to make £350 on top of that? If you can get that then you have no problem whatsoever in pricing up!

[ukminch]

Oh yer so what I was getting at is your system seems about right

[Czlowiek Drzewo]

Let me get this right, if you think a job will cost £200 (wages+all other expenses) then you will want to make £350 on top of that? If you can get that then you have no problem whatsoever in pricing up!

 

Yeah thats what i am after if all goes to plan. if i price a job and the expensies are 2000. then i want to make just under 4000.

 

we ain't cutting grass! tree work is skillfull.

[Mesterh]

Good luck with that then mate.

 

If I could make a £4000 grand profit on £6000 worth of work I woulda retired 10 years ago.

 

What you want and what you can get depends entirely on the market your in.

I'm probably lucky to make 20% profit over the year, in the construction game they look to make 5% profit.

[Mike Hill]

Yeah thats what i am after if all goes to plan. if i price a job and the expensies are 2000. then i want to make just under 4000.

 

we ain't cutting grass! tree work is skillfull.

 

[ame=http://www.youtube.com/watch?v=E6pzxZUXXjU&feature=PlayList&p=4A73A98152E7008D&index=1]YouTube - Supertramp - Dreamer (Live at Queen Mary College-BBC, 1977)[/ame]

 

I wish you luck my freind.

[ukminch]

I dunno I think a tree firm ought to be pulling in £1000/day with 3 people in a team with the right equipment. Then again they need to be doing £1000 worht of work to get it in the first place. I know I have in the past.

 

Having said that at the moment the work is hard to find so I'm now happy with less equipment and two of us to be pulling in £4-500ish a day but were doing half as much work. And then of course how much work have I got - Not very much maybe it's me getting it wrong.........