It’s always a great day when payments start rolling in. Everyone loves to see their hard work pay off financially, but determining prices for services can be intimidating. If your prices are the highest around, potential customers may skip you altogether. But on the other hand, if you don’t charge enough, you’re selling yourself and your company short. As you look at pricing, use these tips on how to calculate pricing for your contractor company.
Do Your Research
Before you get started, it’s a good idea to get a feel for what competitors in the industry charge for their work. Here are some easy ways to gauge pricing.
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Reach out to other companies in your industry to get an idea of what they charge. Don’t be afraid to get specific!
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Attend conventions or trade shows where you can review brochures that you can refer to later.
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Contact a contractors association. They can help provide more accurate details on the going rate charged by other contractors in your region.
As you review competitors’ rates, be sure to factor in your experience. Does the other guy have ten years of experience while you have twenty? Take that into account when setting your prices. Your knowledge and expertise is worth a higher rate. So while your rates may be higher than another company, potential customers are getting better quality from an expert in the field. That’s worth it!
Factor In Overhead
As a contractor, determining pricing can be tricky. You know what your work is worth, but you also have to factor in costs for overhead. If you don’t include these in your pricing, you’ll come up short on every project. These are a few things you need to add in when calculating pricing.
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Equipment and tools
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Tracking software subscriptions
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Cost of running your website
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Work truck maintenance and gas
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Marketing costs
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Insurance
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Time spent putting together bids
Know exactly what’s necessary to run your business so that you not only have enough money for operations, but for a profit.
Determine Your Profit Margin
Every business has it’s required costs such as overhead expenses and even salary for your workers. However, profit is how you reward yourself and your company for hard work and excellence of a job well done. After you pay your crew and expenses, you need to bring in some money to help your business grow! While there isn’t a hard and fast rule on profit margin, it’s typical to aim for a profit of anywhere between ten to twenty percent.
Financing Through HFS Financial
Now that you’re all set on how to calculate pricing for your contractor company, it’s time to get back to work! Since you’ll be busy bringing in new clients, let us take care of working with your new customers on financing. When you partner with HFS Financial, you can leave financing to the experts. Our team has years of experience in the home improvement financing business, and we are prepared to guide your clients through the process. We’ll help pair them with the right financing option for their home improvement needs. Whether they’re financing a swimming pool or a major room renovation, we offer the best contractor financing for customers. We make it easy to get started with a 60-second loan application. Call us today at 1-800-254-9560 for more information. “You Dream It, We Finance It.”