How To Effectively do Job Costing For Your Plumbing Business

Pricing satisfactorily for your plumbing services is hard.

It’s definitely not the most exciting part of the job and it requires putting a couple of factors into consideration. It’s also a viciously debated topic among plumbers but one that brings out common structures that cannot be taken away.

What makes job costing for plumbers difficult is the fact that no two jobs are alike. A flat fee sounds like a great idea for a home visit where the client has easy-to-access pipes and nothing short of a drip problem.

The situation switches when, for that same fee, you’re faced with a client who has a flooded old basement and an impossible reach the piping system.

To assist you to figure out which rate works best for you we looked through financial advice from pricing experts and came up with solutions.

Things To Consider First Before Job Costing

  • How much can pay your bills and keep you competitive?
  • How much work needs to be done?
  • How much time will it take you to complete the job?

The Basics: Estimates

How you show up to your clients sets the tone for how much you can charge and how your client will respond to it.

Show up with a well detailed and visually aesthetic estimate that illustrates how much you’re charging for a particular service and why they should consider your services instead of the competition.

We totally get it if you’re great with spoken words but a written estimate looks professional and reflects expertise.

Wondering what sort of details to include on your estimates?

  • General contact information
  • Project summary (what needs to be done, what is needed to get it done and how long it’ll take)
  • Cost estimate
  • License details and insurance
  • Required permits
  • Guarantee of work and quality

Feel free to be creative with it especially when you know what your clients respond best to. Snoop on the competition more and see what they are doing that is working. Any avenues of opportunity that you can engage? Bring your ‘A’ game on in your plumbing business.

Job costing 101

Every plumber has come across the debate between hourly rates and charging a flat fee. You can only choose one choice based on what your business needs and priorities are. Below are a few pointers that will help you decide which one works best for you.

Charging A Flat-rate Fee

This option is fairly popular with beginner plumbers because it works great for smaller jobs. It’s easier to communicate a higher fee to clients and gives you a starting point if the client decides to initiate you on a larger job.

Most flat rate billers express that customers actually prefer this one because it helps them have better control over the costs of the service. Even if the job takes longer than expected, they won’t panic because the price won’t be affected.

If you’re experienced, this would be a beneficial one to pick up because you can easily spot what the problems are on a job and quickly get it done. You can also (at a glance) quote the client based on work that you can see rather than what the client says is the problem. (usually not accurate)

What will also help you charge higher is completing a job earlier than it says in the book you can. This gives the client the impression that you’re a pro at what you do, hence they’ll pay you expecting a four-hour job that you finish in an hour. Make sure your team is highly skilled if you’re going to be using this method as a way to set rates.

Hourly Billing

A larger job measures well when billed by the hour. The rate on this one differs from plumber to plumber. Some charge $40 whilst others can go up to $200.

Yes, experience plays a factor plus extensive knowledge of the industry and what everyone else is charging.

Most plumbers admit to charging amounts in a day that they know will cover the 8 hours that their employees are being expected to pay.

By using this method, they are able to cater to in-house bills that will be due whether or not the company gets lots of clients or not.

The only problem with this method of setting up rates is that some clients may complain about how much you’re charging if you end up working longer on a job because this means they have to pay more. At the end of the day, they end up feeling cheated and will be unlikely to come back for your services.

Additional Expenses

Every plumber at some point in their career has quoted a client that goes on to request work not included on the estimate. It may seem like a 2-minute job that doesn’t mean anything but these amounts can help smoothen out your cash crunch.

It’s important to then let customers know the costs for every additional cost. Having ready-made estimates that you can edit quickly helps in making your business look more professional.

How can these additional expenses be identified? Here’s a list to look out for:

  •  Protection of homeowner’s other property

If anything else is to go wrong whilst you’re still working you shouldn’t be responsible for this expense. A temporary protection exclusion protects you from unknowns whilst stating that you’re only responsible for certain work areas and jobs.

  •  On-site dumpsters and removal of debris

If a huge pile of debris happens to be in the way of the worksite you need to work on, keep in mind that you’ll be left to haul it away. This is only if there isn’t any contractor on the site whilst you’re there. Account for all your labour instead of taking it up as part of the job.

  •  Replacement of deteriorated piping

Older homes tend to have galvanized piping that likely requires removal and replacement. Suggest this to the client as a second job or simply give them the cost of doing the job. You not only create more work for yourself but ensure that you get paid for every bit of work you do.

Now that we have managed to set rates and look at the options available here are a few business tips on how to price a plumbing job.

  1. How much do you want to make in a week? Divide it by the number of productive billable hours you can work.
  2. By calculating your overhead and profit margin you can add it to your base hourly rate. This becomes your net billable hourly rate.
  3. For job bidding, figure out the exact material costs, plus permits and taxes and any other additional expenses
  4. How many hours do you need to complete the job? Multiply that by your set hourly rate.
  5. By adding the amounts you’ve got in Step 3 and Step 4 you’ll be left with the final number which becomes your quote!

Tradies Accountant