Tips for Calculating Pricing for Your Home Improvement Business
Pricing your work can be complicated. You don’t want to overcharge and lose clients. On the other hand, you definitely don’t want to undervalue your services and lose your shirt. So what do you do? Here are some great tips for calculating pricing for your home improvement business.
Consider Material Costs
Material costs are not a static thing. When you’re deciding how to price a job, calculate the cost of materials you’ll need at the very beginning. You’ll want to make sure you calculate according to what your customer is expecting, so you’ll need to account for any higher-end materials that your customer desires. The cost of materials fluctuates frequently, so it’s a value you’ll need to monitor closely when you calculate pricing.
Consider Labor Costs
Who will be working on the job? Will you hire subcontractors or extra help? Your labor costs will contribute greatly to the total cost of the building project, so you’ll need to charge accordingly. Does your client need their project to be expedited? You may need to hire on a crew, so you’ll have to calculate the extra manpower. If you complete the project yourself, it may cost less but take longer. Many contractors choose to charge an hourly rate for their labor. Then you can estimate how long a particular job will take you, and calculate your labor costs from there.
Consider Your Overhead
One thing you cannot overlook in calculating pricing for your home improvement business is your overhead. These are the everyday costs that you may not always think about like your business truck, equipment, insurance, office expenses, and so many other seemingly little things. But these little things still add up to impact your bottom line. Make sure you’re leaving room in your pricing to cover the costs of these expenses as well.
Consider Your Salary
You also have to consider what you expect to actually bring home to support you and your family. How much money do you need to bring home to make an actual living? One way you can calculate your hourly labor cost is by dividing your desired salary by the number of hours you expect to work in a given year. This can help give you the number you need to charge for your labor, which will ensure you make enough money to cover your personal cost of living and retirement investments.
Consider Local Competition
It will be valuable to consider what other local contractors are charging for their own home improvement services. You have to remain competitive so clients feel your pricing is reasonable. Do some research for other local contractors in the area. Visit their websites to see what information you can gather. Ask around to get a feel for what other contractors may be charging for their building projects, so you can make sure your pricing is in line with what’s fair and competitive.
Calculating pricing for your home improvement business can be tricky, but getting financing for your customer’s next home improvement project definitely isn’t. Make sure you’re offering the best contractor financing for your customers with HFS Financial. Our easy 60-second loan application is the first step to helping your clients obtain the perfect loan options. With HFS Financial on your team, making your home improvement business successful is a goal that you can look forward to. “You Dream It, We Finance It.”
