How to Estimate Home Repair Jobs: A Pricing Guide for Small Businesses
Don’t base your estimates off what the competition’s charging. Construction and home repair estimating is actually an involved process where you should take into account many factors including true labor costs, materials costs, overhead and profit margin.
If you take the time to price your jobs right, you’ll end up with healthy cash flow and a home repair business that’s built to last.
Need a professional contractor estimate template? FreshBooks’ online estimating software makes generating and sending estimates easy. Plus, you can quickly convert them into invoices when the job’s done.
In this article, we’ll cover:
- Check Past Estimates
- Calculate Materials Costs
- Calculate Labor Costs
- Accommodate Specialty Costs
- Add Your Mark Up
- Don’t Discount
1. Check Past Estimates
Take a look at your estimates for past projects that are similar. This will help you arrive at a preliminary estimate that you can share with the potential client. This can also help you figure out if it’s worth it to take on the job, based on whether similar past projects were profitable.
If you don’t have a long history as a contractor, you can try out this free home improvement cost calculator to get a general idea of what the project should cost.
2. Calculate Materials Costs
Now put together a list of materials you’ll need to do the home repair job. There are a variety of ways to calculate how much materials you’ll need. One method is to use a building materials calculator.
There are also a variety of apps for contractors that will help you calculate materials costs. Our article on apps for contractors lists 10 of the best apps out there.
3. Calculate Labor Costs
Include labor costs in your price, even if you’re the only one doing the job. If you have an employee doing the work, make sure you factor all labor costs into their quoted hourly rate, advises Remodeling.
You need to know how much workers compensation, benefits, bonuses, insurance, vehicles and phones are costing you. You may be paying an employee $20 per hour as a remodeling labor rate but after these extra costs, you may actually be on the hook for $35 or more per hour. Remodeling’s labor burden calculator will help you figure out how much it actually costs to maintain your employees.
You also need to estimate how many hours the repairs will take, whether it’s exterior or interior. Small jobs like replacing light switches, hanging a picture, replacing a thermostat or repairing a leaky faucet or garbage disposal should take no more than an hour or two, according to Home Advisor.
Medium jobs like repairing drywall, replacing a window, hanging a new door and hanging shelves should take two to four hours. And large jobs like installing a kitchen sink and other big plumbing jobs, wiring and electrical work, installing heating and cooling registers and repairing a wall, flooring or roof take at least four hours, if not a couple of days.
4. Accommodate Specialty Costs
Look into the cost of high-end or specialized materials needed to complete the job. Always verify pricing of these specialty items yourself but be aware that by the time you actually order them, the price may go up. Mark up specialty items more than usual to accommodate these inevitable price increases, advises Remodeling.
5. Add Your Mark Up
Knowing how much to mark up your jobs is certainly an art. Your markup should not only give you a margin but also cover overhead costs. Part of this involves calculating the true cost of labor, as we discussed above. It also involves accounting for other business expenses.
Here are some typical handyman expenses:
- Monthly living expenses
- Health and liability insurance
- Vehicle mileage and maintenance
- Website costs
- Office supplies
- Phone and internet
- Licensing fees
- Taxes: self-employment, federal income tax, state income tax
Your quoted hourly rate needs to cover these expenses.
A 35 percent margin is one rate suggested by Remodeling. Try cutting down on your overhead costs to help you meet this number. Even calling your cell phone and internet providers to make sure you have the best rate possible can help matters.
6. Don’t Discount
You might think discounting is a great way to edge out the competition but in the long run, you’ll be doing your home repair business a great disfavor. Adding discounts makes you look desperate, undercuts your professionalism and hurts your cash flow and chance at longevity.
You may even try raising your prices to increase your cash cushion. A price increase of 0.5 percent probably won’t be noticed by your customers, but your bank account will thank you.
If a potential customer pressures you for a discount, tell them you’ll review the numbers and get back to them. The customer may just ask you to decrease the project scope instead. This means you’ll need to pick up more jobs but at least you’ll be making the profit you need.
After all, you shouldn’t be selling your jobs based on price alone. You should also be selling yourself based on the value you provide, advises Remodeling. Being reliable and offering excellent customer service will probably win more happy customers than just a low price.
People also ask:
- How Much Does a Handyman Charge per Hour?
- How Much to Rewire a House?
- How Much Does a Plumber Charge per Hour?
How Much Does a Handyman Charge per Hour?
A handyman charges on average $60 to $65 per hour in the U.S., though the price can range from $55 to $75 per hour for an independent handyman, according to HomeAdvisor.
The rate can climb up to $125 per hour for professional handyman services, though the average is $77 per hour.
In the end, the hourly rate will depend on where you’re located and how experienced the handyman is.
HomeAdvisor has a handy guide to how much your project will cost by zip code.
How Much to Rewire a House?
It costs between $8,000 and $15,000 to rewire a house that’s 1,500 to 3,000 square feet, according to Angie’s List. The final price will vary based on how old and how large your house is and how easy it is for the electrician to get at the old wiring.
How Much Does a Plumber Charge per Hour?
A plumber typically charges between $45 to $200 per hour in the U.S., according to HomeAdvisor. The total job cost is usually between $175 and $450 for typical jobs like repairing bathtubs, sinks, toilets or faucets. If the plumber charges a flat rate, this is usually $300 on average.