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Things to Remember When Calculating Costs

Quoting or calculating costs on projects can be a daunting procedure. With all the materials and equipment used to complete a job, mistakes are easy to make when quoting or costing in general. In this article, we will go through a few tips and notes that you can keep in mind when doing your next project.

 

1. Identify all of the Materials and Equipment you will need.

There is nothing worse than fnding out you didn’t quote for a set of materials or that extra wood panel...

Gather and list every single material part or piece of equipment you will need to complete this job so you can quote your customers accurately!

Pro Tip #1: Create a master checklist with all materials you could use for different projects. This becomes a visual representation of what you will need per project.

Pro Tip #2: Putting materials into logical groups will make it easier to maintain and update a quote - it's rare for a customer to not come back with a change (grouped units makes this easy in MaxCut).

For more information, watch our short video on grouping & library items.

2. Think About Indirect Costs.

We can all quote on tangible materials, but there are always hidden costs that need to be considered. Indirect costs such as toll fees, petrol, vehicle maintenance, job insurance etc, tend to add up pretty quickly, and without proper management and listing, these costs will quickly be forgotten and won’t end up on the quote.

Pro Tip #3: Remember, the equipment you use has a lifespan. Don’t forget to charge just enough so that you are accounting for the general wear and tear in your machinery. For example, Saw blades go dull after a while. Make sure you charge customers enough so you can replace the blade after so many years.

3. Calculate your Proft Margin

The next thing to remember is to calculate a proft margin that suits both you and your customer. A common method is to have a proft margin for materials and a separate proft margin for your labour. Add this to your basic costs, and you’ll have your fnal price.

Pro Tip #4: Look at competitors prices and use them as a guideline for your proft margin. This will also ensure your prices are market-related.

4. Leave Room in your Budget for those Unexpected Costs

Let’s be honest here, NOTHING EVER goes exactly to plan. This is why we suggest leaving a little room in your budget for those unexpected costs.

Materials and equipment do break and they do end up going to sock-island where we will never
fnd them again. That's why you should keep a bit aside for these hurdles or stumbling blocks.

5. Don’t Underestimate Labour Costs

One of the most important aspects you need to take into account is the time spent on labour alone. Labour isn’t the easiest line item to calculate because it all depends on skills, experience, as well as the time spent on the entire project. The easiest thing you could do, especially for smaller businesses, is fnd a fgure for labour that you think is fair and a true refection of the skills and experience you bring to the party and multiply it by the number of hours worked on a project.

 

So there you have it. 5 rapid fre tips to keep you proftable in the long run.

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