I'm really sorry for reusing old posts. I'm busy compiling a list of parts I need for some plumbing, but I couldn't resist checking the forums :mad2:
Here follows a modified version of a previous post I made on the subject of pricing.
sWe's guide to basic pricing principles
Introduction
I don't believe you can have linear pricing if you want to have a steady income. One price per square meter which is just right for, say, bathrooms, is probably completely off when quoting kitchens, or really large terrazos, etc. It is better to base your pricing on day rates, but there are many things to consider.
It comes down to the following:
- How long is the job going to take? Smaller jobs take proportionally more time than larger jobs.
- How difficult will it be? Are there variables which might complicate the job? Will you want extra pay for those variables?
- How much do you want to make in the end? How much do you need to make in the end?
- Can you remain competative with the derived pricing?
I have no idea what reasonable pricing in the
UK is, or how your tax system works, so you may need to modify the following a bit to better suit your conditions.
The basic numbers
Tally the static expenses relating to your business an average year. These include tool purchases/repairs, trade insurance, tax and maintenance on your vechicle, etc.
Divide the sum by the number of months you work an average year.
Add what you need to make in an average month to have a reasonable
standard of living, including tax.
If you plan on taking a vacation lasting, say, a month, make sure to add a months salary divided by the number of months you work an average year.
Lets say, for demonstrational purposes, that the sum you come up with is £2000.
Here's a kicker: Not all your work is spent on things you can charge for. Unpaid time includes doing paperwork, meeting customers, etc.
You need to take this into account.
Say you spend 80% of you working time on things which you can charge for.
Divide £2000 by 0,80 (80%). The result is £2500.
Divide £2500 by the number of days you work an average month (22 for a 5 day week in an average month).
The result is that you need to make £113 a day if you work five days a week, of which 80% of the time is on things which pay, to earn £2000 in a month.
You have to put your pricing in relation to this, as well as the going rates on the market. A day-rate of £130 seems to be common when reading on these forums. If this is the case where you live, and the £113/day applies to you, then all is well, and if you manage to consistently get £130 a day, then you'll end up with a £375 profit every month. That's almost 19%.
If the local day-rate is lower than the £113 you need, you need to either cut your expenses, or increase the amount of time you work on things you can charge for.
Comparing pricing
Lets say you got hired to do a 3m2 kitchen splashback. Lets say it takes you one working day to complete it. If you charge 130$ for it, not counting materials, that's a little shy of £44/m2.
For comparison, lets say you got hired to do a bathroom with a total of 25m2 tiling to be done, and you need to fix the substrate. Lets say it takes you four days to complete. If you charge £130x4 for it, not including materials, that gives you £520, and a m2 price of about £21.
Lets compare a linear rate of £20/m2 + materials, as it seems to be a common price in the
UK, with the above method of pricing, using the same examples:
Had you charged £20/m2 + materials for a bathroom (£500), it would've been about right from the economical standpoint we calculated earlier in this post.
Had you charged £20/m2 + materials (£60) for the kitchen splashback, you'd be losing money from the economical standpoint we calculated earlier in this post.
Conclusion
See what I meant about linear pricing being a tad off?
You can add any number of variables to your pricing; that which is mentioned above are just basic principles. If you, like me, hate surprices, and like being on top of things instead of just charging straght ahead without any further consideration, it really helps to be thorough in all aspects of the game called "The tiling business", not just the tiling itself.
Just my (many) five cents on the matter.
And yeah, I like writing exhaustive posts
I'm sure atleast Fekin agrees on this point :yes: :joker:
