Priceing

[Top Notch Joiner]

Don't pretend that you had me on ignore, you couple of spanners!

You two are more transparent than my quotes .

[Doug]

I'm guessing you're wrong TNJ

[Tufty]

Back onto topic a little..

Reference the 'hourly rate', does this, or should this, include overheads such as workshop rent, business rates, energy costs etc or is this factored in somehow else?


Maybe I'm over-thinking this but I'm looking at starting up a little business and costing as I see it can be a make or break, I don't plan on being a busy fool.

Any tips on finding premises on licence rather than on the usual years long leases with excessive dilapidation at the end?

[kevob]

Hours taken x hourly rate + materials and expenses + 20% (or whatever mark up you want to put on)

Thats a very simplistic solution, How do you work out your hourly rate and mark up?
Unless you have worked these out correctly you can not know if your making or loosing money

[mark270981]

Hours taken x hourly rate + materials and expenses + 20% (or whatever mark up you want to put on)

Thats a very simplistic solution, How do you work out your hourly rate and mark up?
Unless you have worked these out correctly you can not know if your making or loosing money

It's beautifully simplistic and works perfectly for me

My hourly rate are all my overheads

Premises
Staff (accounts - admin - me - production manager)
Insurances
Business rates
Vehicle costs
Heating
Electric
Machine breakdowns
Health and safety
Waste management

Divide all the above by the number of production hours in a year. This will then give you a figure per hour that covers your overhead. Add this to an hourly rate that it would cost you to pay a joiner 13 quid an hour or whatever)this then gives you your charge out rate when calculating your labour hours on your quote.

then add on your materials

Then add on your profit

[kevob]

Thanks for replying
thats spot on - I see a lot of posts that tell people to charge what they want to charge for their hourly rate + materials etc but never explain how to get their hourly rate
I actually do it the other way and charge an hourly rate that just covers the labour then cover overheads in my markup, this makes it easier to have several different hourly rates for different skill levels

to the original poster also consider that mark up / profit is not a bonus on the job it does 2 things

1. it is a buffer to help absorb any pricing errors
2. It puts money in the pot to help your business grow - if you want to take on bigger jobs you will need more cash in your cash-flow to buy materials or pay extra labour, you may need to purchase more tools, you may even need to move to bigger premises and without profit non of this is possible

[mark270981]

I used to do it your way

And found that by using the new method it actually averages out very well, the beauty of this is pricing becomes very quick.

I employ 5 joiners and 3 trainees, so I am unsure if this method will work using with more or less labour??

[Mike25985]

Do any of you use spreadsheets? I'm trying to sort a formula for converting cubic metre price into individual pieces. Say it costs £1500 cubic metre and I want a piece of say 100mmx50mm 2metres long any ideas how I could do this?
Thanks

[thatsnotafestool]

Do any of you use spreadsheets? I'm trying to sort a formula for converting cubic metre price into individual pieces. Say it costs £1500 cubic metre and I want a piece of say 100mmx50mm 2metres long any ideas how I could do this?
Thanks

Best way to do it is to build up the spreadsheet gradually if you are new to them. Three data entry cells (A, B, C) for height, width, length. Decide what unit you want to use and keep it the same for each of them. Say you choose mm. Then make another cell (D) with a formula which is A*B*C which will give you cubic mm. Make another cell D and enter a formula which is cell C divided by (1000*1000*1000) which will give you cu m.
Another cell E where you enter the price per cu m (in your example £1500) and finally cell F where you enter a formula = cell D * cell E . Done

[Louis1984]

Or just ring lathams and ask them...