What is Your Time Worth?
With every estimate, there is a debate and a decision to be made about where the numbers need to land. It’s a juggling act. “If I charge too much for the time, I might not get the job. If I don’t charge for enough, I won’t make a profit.”
When clients ask about pricing, you need to justify the amount confidently. Confidence comes with experience. There isn’t a contractor that hasn’t learned the painful lesson of underestimating the cost of a job. It’s a difficult position to be in.
You wear many hats. Estimating and selling is a part of the project as much as building the project. Calculating an estimate is based on knowledge but often includes unknowns and is not an exact science. Sometimes you are right on the money; other times, you count your losses and move on.
Worth Taking the Job?
When a new contractor starts, they can easily find themselves struggling with the value of their time. It can be difficult to establish consistent work in the first few years. It takes patience and time to build a client base.
Although there is value to accepting anything you can get your hands on, it is not sustainable if you lose money on every job. Sometimes you have a gut feeling about taking a project. Trust your gut. If you have reservations, stop and reconsider taking the job. When things feel off, it most likely was not a good fit. The job with the picky homeowner may result in a nightmare. Focus on getting better jobs.
Sometimes there is a good reason for taking a job and not making a profit. An example would be a small repair job that takes under an hour and involves 2 or 3 trips to a hardware store. It’s not the type of job you would typically take. You would charge a minimum trip charge, but you’ve been asked to help someone out and decide to waive the trip charge. In this situation, it’s about goodwill, which can go a long way. It may not be a profitable job, but it may pay off down the line with referrals that lead to better jobs.
Another example is when an unprofitable job may lead to a more profitable, more significant job. This may be a step towards becoming a homeowner’s go-to person or a result of submitting a lowball bid to get more work from a large contractor. While profits need to sustain your company, you also ride a fine line to establish future jobs.
Communicate what you are Worth
Clients only see the time physically spent on a project. You may need to educate clients on what goes into a project for the client to understand what your time is worth and the costs involved. Very few clients have an open checkbook, and most are looking for “the best price.” One skill needed is the ability to communicate the cost and the reason the client should choose you for the job.
Being the lowest bidder doesn’t guarantee getting the job. Be upfront; let the potential client know that you may not be the cheapest. Follow that up with the reasons that you aren’t the most inexpensive. Present yourself as knowledgeable and trustworthy. Building trust makes money less of a determining factor for clients deciding who to hire.