How Should I Price Out Jobs? 5 Different Methods You Can Use to Estimate a Job!

How do you price out a job that you are going to do? Certainly, a valid question as we don’t like to take on work and lose money!! In this episode, Dustin dives into this topic to shed some light on the subject.

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#electrician #electrical #electricity

1. Time and Material Method. If something starts off small but has the potential to grow into a huge project, or there is a ton of troubleshooting or remodeling are great examples. In a nutshell, you are charging for your time it took you to do the work and the materials. Maybe the time for you to go get the materials also. It keeps the person doing the work from losing money by giving a cost up front that was too little for the unseen items or too high of a price for the person having the work done by giving a price that tries to account for EVERYTHING that you COULD encounter.
2. Cost Plus Method. This simply is coming up with the cost you THINK it will take to do the project and then adding in what you need to make as profit. This is most often used when you know the hours and materials it will take to perform the work and then you add what you want to make on top of paying all of your bills etc.
3. Square Foot Pricing. While normally used for new construction, this method uses information taken over time from the AREA that the work is being done in. So, say new homes in Austin TX, on average, are being built for X dollars per square foot, with the electrical portion of that work being Y dollars. Then you just use that number per square foot, multiplied by the square foot of the project you are going to be estimating!
4. Task Based Pricing. A good one to use when just starting out, you simply charge per the task you are going to be doing and then can adjust a LITTLE BIT for being job specific. So, let’s say you come up with $60 to hang a light fixture- that covers the cost of all of your expenses and the time it takes to hang the light. Then adjust a bit if you need a taller ladder or if you have to move a bunch of their items out of the way or things like that. It can be a quick way to give a price but requires history in knowing how much you have made over time doing those types of things to be the most profitable.
5. Estimating Software. There are several different products that are available from a multitude of suppliers. Usually, larger companies use this method as the costs to own or lease the software can be high, as well as those companies needing very specific margins to be the most efficient. Typically, these software programs allow you to input your hourly rate, up to date pricing for materials, and an hourly time frame to install something.
A few things to keep in mind. First, trip charge. Your time shouldn’t be free. And if you are making multiple trips to a single place and not get the work in the long run, it could end up being a huge waste of money for you. The other thing to consider is minimum charges. What is the minimum amount of money you would be willing to make to show up and do work? If $50 was charged to just replace a switch, is it worth your time to do the running around, replace the switch, do the paperwork to get paid, etc.? More than likely a $150 minimum or $200 minimum would be better. If you only accepted the $50, all the time invested in making that $50 you would not be able to be somewhere else potentially making more money.

[jfarley]

I like knowing annual fix cost (vehicle insurance, depreciation, rent, property taxes, etc) and monthly variable cost (mileage, fuel, tool wear, utilities, etc) then narrow the variable cost into both fixed cost ( I spend at least $x/month in fuel!) and the range of costs.

Knowing what owning a business costs at minimum for 365 days a year and only working 200 of those days means you're ass better be billing nearly double of your running costs.

All that before thinking about the cost of the job itself 😉

[jessejohnson]

Discounts and buddy pricing screwed up a friends business. His friends told their friends his rates at their buddy rate. He brought me on as a manager and to run his office. When I explained how his "discount" price was his actual price and if he wanted to make more he needed to set a firm hourly and bring everyone up to that, his eyes kinda lit up with understanding. The first year I worked for him he cleared $75k net. The next year he cleared $350k net.

[alexheredia]

I am works as electrition for the last 7 years, Residencial and little bit comercial .Now I try to make my own business.Thanks God I saw I lot of this videos. This guy is one those amazing persons to helps others, people like this are a few on this world trying to help others. Thank you. God bless you and give you more and more blessings then you can handle Señor. Dustin stelzer.
Super smart guy.

[DiamondTech]

Man, you hit the nail on the head about the six month mark. I'm right there and am finally starting to see the fruits of my labor. I was scrounging for work in the beginning just to try and make ends meet. It's getting to a point that I'm trying to be more consistent in my pricing, if I don't get a job now because of a price it's no biggie. I don't show up to work because I like wire and running conduit.

[jojolandreneau]

Dude I’m in Austin Texas, Fellow Electrician just wanted to say thanks for everything bro. I’ve used a lot of your content through the years!!! Big Fan buddy

[alexayache]

Did 4×6" recessed lights the other day for $850. $200 was materials and $650 labor. Took me about 5 hours.

[keithhults]

35 years ago, when the company I spent 25 years with, decided estimating is now part of my job, I read a book named Means Standards of Estimating. I calculated set cost formulas for new construction. Installations in a finished area was a price range. I told my customers, if I finish earlier your price will go down. I always estimatedhigh in furnished dwellings. I'm not in the field anymore. Watching these videos keeps me connected to an awesome career I had.

[MrTimdtoolman]

I have been self employed for about 17 years myself as a contractor and from my business experience I agree with pretty much everything you said Justin. I appreciate your channel, keep up the great work.

[lyfandeth]

One thing I've found is that if the client asks for something additional, and for whatever reason that extra is not costing me much, I may just itemize it on the bill as NO CHARGE. Everybody is happy to see they got something for nothing.
Don't forget you have to add the costs of your vacation time, sick time, money for a retirement fund...all those things that corporations figure into the real cost of work. And if you are self employed, you pay BOTH halves of ss/fica.

[snakes]

I’m taking my career further taking my journeyman test soon and I appreciate everything you have helped me learn when im not at work wishing for your continuation education in Tennessee !!!

[johnlynch]

I started my own business 4 months ago and this was an amazing video for me to watch. Thank you for making it.

[rexfenris]

This is a Master Class on ANY small business pricing venture!

[L_Estrella]

DUSTIN,
I love how far you've come since first watching your earlier videos. I appreciate everything you've taught me and continue to teach me from the content you post.
Sincerely thank you for making me a better electrician.
~Luis Estrella

[stuartfoster]

Is it so good to see people much younger than me that are so confident in their skills and actually take pride in doing what they do and I know once you develop a reputation I've hit the point where I will not start my truck for less than $500 and I still get thanks and tips and those things and tips allow me to do many charitable jobs for the elderly for actual people in need sometimes the appreciation of a customer is worth the pay

[bangler]

I've been self employed for 35 years and I wish it hadn't taken 25 of those to really learn all of the things you just explained. I would be so much more comfortable here, shortly before I retire. I gave too many people who could afford to pay for what they wanted, great deals and now they're benefiting from my lack of enrichment. It's that key phrase: "know what you're worth and don't undervalue yourself". As important as learning your trade well.

[NovaFox]

Not only educational, respectable, and enjoyable content... But very inspiring. I've been the 'low-price, high-quality' guy for a while, I need to step out of my comfort zone when it comes to pricing.

[srca]

You’re awesome brotha thank you for the knowledge. Just started my electrical shop and you’ve been such a help. God bless you. 🙏🏻

[_k]

After leaving the IBEW, sixteen years as a commercial industrial journeyman, got my State license, that was ten years ago.
I wouldn't say the hardest thing is figuring out your rates, it is figuring rates for different clients. I do service work mostly, residential and commercial. But, about 70% of my work is doing service work for all the major film and television studios in Hollywood/Los Angeles, on locations during production, in homes, restaurants, hotels, hospitals, cathedrals, country clubs, office buildings, historic homes and just about anywhere. I had to figure some unusual pricing into my rates, things like working on light fixtures that are one off, 100 year old, irreplaceable, or museum pieces, chandeliers by weight and size, rates for same day job, where I have to cancel a regular client job and reschedule it so that I can drive sometimes 20 minutes sometimes two hours to a set where there are 100 people, crew and talent, shooting scenes but need me to fix some issue that someone forgot about or just discovered in the part of the house where filming will be taking place after lunch break, so now the pressure is on me to keep from holding up hundreds of thousands of dollars and keeping the film schedule on time. I get paid very well by the studios. Also, my minimum rate for just showing up on set, is $350 even if I work for five minutes. Rarely do I only charge $350. It's usually $550 at the very least and up to as much as $4500.00 or more, for a day. Plus, 95% of every studio job is two jobs because I come in and do my thing before actual filming starts and then when they finish shooting, I come back to restore whatever lights and switches or smoke detectors, exit and emergency signs and make it just like it was before the crew took over the property. So I get paid twice for almost every job. It's a good niche that I've gotten myself into.

[misael]

This is very helpful for me, I just found out I needed to here something like this, better have less work and charge what’s worth then having a lot and stressing out . Thank you!! I appreciate it .

[MagneticPerturbation]

Appreciate your honesty as well as your well developed, well articulated knowledge base and experiential wisdom. You definitely seem to be out to help your brothers and sisters in our field regardless of their level of investment. Keep on rocking it! I'm enjoying seeing your successes.