Pricing

[premmington]

people ask me to do stupid worthless jobs or out of town stuff i just say its uneconomical for me or il charge by the hour from home and for fuel

Burn any job - that ain't no good. I just quote super high - if they go for it - its a winner.

You can only get a quote worng one way mate...

 

[Jelly_Sheffield]

i can tell you not a lot of measuring/inspection equipment can be bought for £7k.

Luckily most of mine has been bought used.

But just my new mitutoyo stuff i've bought adds up to well over £1000.

Even with used stuff, if you need calibration it quickly adds up.

I was fortunate enough to be gifted all of my Grandfather's measuring equipment when he realised I was doing lots of machining, and at the time had a pal who was running a metrology lab, so got them all recalibrated as a "foreigner" in exchange for two 20l jerry-cans of cloudy cider.

He's since been promoted, so when I recently bought two "affordably priced" sets of 200-300mm and 300-450mm mics and figured "these need calibrated, and I should get grandad's tools done again as it's been a while" I went out to a commercial outfit for a price and nearly fell off my chair when I got the price back.

I now figure I will get items calibrated as/when I have a job that warrants it, more expensive per item, but less outlay...

Tooling is a whole different game and i think we spent £1000 with cutwel/zoro last year on just lathe/mill tools. I'm one bloke in a small workshop.

[Shuddering]

I probably have that much put away in ISO40 and Multifix C toolholders alone at this point.

Bagged some fantastic Dolfamex insert milling tools at an auction... But proprietary inserts, so there's a huge outlay to keep them going (even though per insert they're cheap).

I when I first got the lathe I rationalised the tools I bought to minimise the number of different insert sizes and geometries I had to stock...

But over the years more and more unusual tools seem to creep in for doing specific jobs and then justify their existence.

 

[Jelly_Sheffield]

My only advice is: "Cheap is the enemy"

Cheap parts

Cheap tools

Cheap labour

Cheap customers

The race to the bottom of any trade is easy - aim high...

Not wanting to dissent too strongly, because that's all good advice for OP starting out... But there is a place for competing on price.

However despite seeming like an obvious strategy for a new business... It's probably the absolutely worst place/time to try it.


Because of the race to the bottom effect anyone who wants to compete on price needs to:

1) Be established enough to really understand their competitors pricing, how the customer thinks, and what the "market rate" for their services is, so they can undercut by just enough to win and no more.

2) Understand how their business is working and what their future prospects are well enough to know when it's appropriate to prioritise getting work through the door to keep the lights on over profitability.

3) Know when a job is actually a clever trap set by the customer.

4) Know what customers business they actually want enough to make smart decisions about when to be willing to get the pencil sharpener out. (Payment terms/history is often the clincher here, a poor payer should never get a cheap price).

All stuff which is hard to do without a decent amount of time behind you.

 

[premmington]

Not wanting to dissent too strongly, because that's all good advice for OP starting out... But there is a place for competing on price.

However despite seeming like an obvious strategy for a new business... It's probably the absolutely worst place/time to try it.


Because of the race to the bottom effect anyone who wants to compete on price needs to:

1) Be established enough to really understand their competitors pricing, how the customer thinks, and what the "market rate" for their services is, so they can undercut by just enough to win and no more.

2) Understand how their business is working and what their future prospects are well enough to know when it's appropriate to prioritise getting work through the door to keep the lights on over profitability.

3) Know when a job is actually a clever trap set by the customer.

4) Know what customers business they actually want enough to make smart decisions about when to be willing to get the pencil sharpener out. (Payment terms/history is often the clincher here, a poor payer should never get a cheap price).

All stuff which is hard to do without a decent amount of time behind you.

Dissent is good - I am very open to any persons input!

(honestly I invite it - other peoples views - it gives me a better choice to make my own mind up).


A new start up - has to "act like they can do it".......

Stop pricing low to compete/complete - the "market is yours" - "if you can do it".....

Failure is not an option! Aim high - the world is your oyster......

 

[Ubique]

When I went self-employed, part of the set-up plan was to get VAT registered, for a couple of reasons - businesses will deal with you more readily, it gives a level of legitimacy and also give the impression that there is someone else that sets the prices so no 'wiggle room' or discounts for cash. I never took cash, it's a pain. Card payments work much better - you know you've been paid and it's in your bank the same day, consider whether the non-productive time going to the bank once a week is worth it - not just in lost earnings but parking, fuel etc. vs. the card payment fee. Never take cheques - most if not all businesses have a 'company credit card' or can do BACS, only give them 'terms' once you know them - offer a 'payment upon completion' discount if you have to but make it clear in your quote that you expect to be paid upon delivery.

 

[James1979]

When I went self-employed, part of the set-up plan was to get VAT registered, for a couple of reasons - businesses will deal with you more readily, it gives a level of legitimacy and also give the impression that there is someone else that sets the prices so no 'wiggle room' or discounts for cash. I never took cash, it's a pain. Card payments work much better - you know you've been paid and it's in your bank the same day, consider whether the non-productive time going to the bank once a week is worth it - not just in lost earnings but parking, fuel etc. vs. the card payment fee. Never take cheques - most if not all businesses have a 'company credit card' or can do BACS, only give them 'terms' once you know them - offer a 'payment upon completion' discount if you have to but make it clear in your quote that you expect to be paid upon delivery.

+100%

We have a 5% surcharge for cash payment.

I only use it as a stick if someone tries to barter.

I’m not going to charge some old granny 5% extra for paying me cash after I’ve serviced her mower!

 

[Ubique]

I used to occasionally get asked 'can you knock the VAT off for cash?'- short answer was 'no - we've agreed a total price beforehand', long answer that was occasionally rolled out was 'so you want me to defraud HMRC where you get all the benefit and I take all the risk? do you know how many years they can go back through accounts and make an assumption of guilt to which I have to prove innocence? Everything I buy has input VAT and is traceable to me, if I don't sell it, I need to prove use as 'cost of sales' or wastage, so no - we've agreed a total price beforehand'. Unless all your suppliers are very local and you have time to collect, cash is a pain. Much better (IMO) to use a reliable supplier that will happily deliver to site if required and you can email at stupid-O'clock at night knowing they'll get things moving in the morning without having to make interminable phone calls. That was my experience based upon a turnover of >£30k a month when I finished anyway.