Right pricing

[Gosh14]

I think lots of us fluster a bit of right pricing for the job. What is correct? Is it not too cheap? Or too much? I`ve seen few threads here discussing pricing, but they where too specified or too wide. So why not share some pricing ideas in this thread?
As from myself, I`m pricing up at the cost of material (+10% on average) + cost of reasonable waste and €20 per hour of work. That includes my expenses in a workshop i.e. rent, power, gas etc.
That is a quotes I`m giving to customers (just starting). Is that reasonable?

 

[ajlelectronics]

A very wise old shopkeeper, many years ago, told me that if your gross markup is less than 33% then you have a nett loss.

 

[tigler]

Yes, a 1/3 is the rule of thumb for gross but it's better to work out costs then add labour rate. So in the hourly charge it should be costs (rent, utilities etc), labour and margin.

 

[Drains]

As from myself, I`m pricing up at the cost of material (+10% on average) + cost of reasonable waste and €20 per hour of work. That includes my expenses in a workshop i.e. rent, power, gas etc.
That is a quotes I`m giving to customers (just starting). Is that reasonable?

The 10% may be reasonable inasmuch as selling material isn't your core business - it's probably your labour which will make you money, but don't forget to include your labour involved in buying materials (phone time, internet time, priceing, collections etc). And your 20 Euro an hour is low end if you have any overheads (which you do). You might struggle to make a half decent wage off that. However it also depends on how fast you work. If you're competing with companies who can do the work in half the time for twice the hourly rate then you need to drop your prices or offer something they don't. If they take the same time for twice the rate, you're cheating yourself.

The biggest issue with pricing is value for money, and whether you offer a service others don't. If customers would rather come to you because of quality, helpfulness, speed etc, then you can charge to suit for the service.

There are no baselines for pricing, it all depends on what you can reasonably get away with and remain competitive, successful, busy and satisfactory to your customers.

Don't forget, you need to make a profit over and above your wage if you want to invest in the company. New machines, new tools, replacing worn-out kit etc, all costs money, and if you want to improve and offer better services, you have to have funds. It's better those funds come from profits you've already made than loans from the bank that you have to pay back (if you can get them).

 

[sean-1]

With my metal finishers I charge a base rate of £30 ph plus materials. grit blasting has no surcharge as the costs are negligable, beadblasting £9 ph, polishing depends on the job (alot of sharp corners equals a lot of destroyed mops). I also have set prices which are always useful eg, for polishing out welds I charge £5 per 50mm, polishing 1" box section £10 per meter etc.
So when quoting I would suggest you have a list of jobs that you can time and work a price from i.e. 100mm weld would take X ammout of time which would cost Y £'s, 50mm box takes X ammount of time per cut would cost Y £'s etc plus set up time, plus materials.
Also find out what similar companies in you area charging per hour and base what you charge on their hourly rate that way you can be competitive in your area and not overcharge or even worse price too low and not make anything out of the job. Its easy to find out what other companys charge just make a simple frame or get some drawings pop them in to local firms and get them to quote on making them.
One last thing I always do when I am talking to a new customer is if it is a production item simply ask if they have had them made before. If they have tell them that you will do one for what they are currently paying and if you can do it any cheaper you will. You would be surprised how many people will tell you what they are already paying and can lead to some very nice jobs (about 8 years ago I used this tactic with a company who produces stainless steel flow meters who wanted the outsides linished for an even look. I am still doing the job 8 years on and with a value of 3 -4k per month).
Hope this helps
Sean

 

[Welderpaul]

I work on a 30% mark up on costs. My accountant has done lots of calculator tapping and i'm coming out at 44% profit for last year.

 

[Gosh14]

Thanks all. Most of my pricing is equal or over mentioned 30% mark. So i wasn`t so wrong setting up the hourly rate. On some quick jobs you can earn less according to material cost but you`ll push stuff through the shop faster. And will get more expenses for taxman.
By the way, I`m doing stainless if it makes a difference.

 

[Gosh14]

What would you price for some kind of similar gates but just with the single curved pipe at the top of it?

 

[Welderpaul]

Stainless?

 

[Gosh14]

Yepp.

 

[Welderpaul]

Without putting pen to paper, i'd go in about 5 grand. I can see lots of hours work in those.

 

[GB75]

Without putting pen to paper, i'd go in about 5 grand. I can see lots of hours work in those.

Blimey!!! I agree with paul thats a fair few hours and a few bobs worth of stainless stock also! very impresive work though, a little too elaborate for my tastes but first class work non the less!

 

[Gosh14]

I simplified design a bit, removed tubes in the middle, went for dull finish instead of mirror one. Quoted 2.500 EUR approx + whatever tube rolling cost. That`s fabrication only. Material cost is around 500. Will see the answer.