It can be difficult at times to estimate jobs. Sometimes a customer wants a quote right on the spot and you may feel pressured to come up with a number right then and there. You may bid too low and end up working for less than you would like or you may bid to high and lose the job. Either way, learn to come up with the price and stick with it.
Take Enough Time to Think Through Everything
Don’t let the customer pressure you into coming up with a price right there on the spot if you’re not comfortable or experience in doing that. Especially in the beginning of your handyman business, you will need some time to think over the job completely to come up with a solid estimate. Let the customer know that you are going to need a few minutes to come up with a price. They will understand and give you your space. Take this time to go over the job in your head (or on paper) and factor in setup time, all the steps necessary to complete the job, and also cleanup time. It’s very easy to underestimate the time required to complete a job when you forget to factor in setup, preparation and clean up time.
If you need to, feel free to go out to your truck or van and sit down to think about everything. Spend at least 5 minutes to go over everything in your head or on paper and estimate the time required to complete the job from start to finish. Factor in any trips to the hardware store also. Once you have a set time that you are comfortable with, multiply that time by your target hourly rate and add in the service call. If there are materials that you will need and you already know the cost be sure to factor in a 15-25% margin for them. If you do not know how much the materials are going to cost then you will need to get back to the customer after you have researched those costs.
Keep in mind if you quote a price for labor only you will often lose out on the ability to markup the materials for the job as the customer often wants to see the receipt after the job is complete to reimburse you for the materials expense. However, if you are really bold then you can show them the receipt and let them know that you have to markup that cost to cover your time and gas going out to pick them up. This is not unreasonable but the customer might be a little disturbed by it. Make it easier on yourself and quote a price with labor and materials with a built in margin for the materials.
[Update: I don’t show the customer a receipt anymore. I let them know that the materials will be included on the final bill. I’ve since decided that there is no reason to show them a receipt. That’s for your records only.
Give Them The Price and Stand Strong
Once you have come up with a price that you are comfortable with, go back to the customer and let them know. If you would like to justify the price before giving it, explain everything that you will be doing then let them know how much it will cost.
Do not give the customer the freedom to think that they can negotiate with your pricing. Give in just once and they will talk you down on every job.
It is not uncommon for customers to try to talk you down on your estimate. You can, however, eliminate this as much as possible by following the principles in this article on Professionalism. Some things include wearing a company uniform, driving a company van with a logo on it, and being professional in everything you do. Do not give the customer the freedom to think that they can talk you down on your prices. Give in just once and they will talk you down on every job. This is a recipe for disaster that can be avoided completely by following one simple rule. Quote your price and stick to it no matter what.
Quote a price and stick to it. Never diverge from that policy and you will earn more money and eliminate problem customers.
When you were figuring the costs in your head and how much time it would take you to complete the job you did not factor in extra cost for the customer asking for a discount so why would you give them a discount now? I have been perfectly honest when first time customers have tried to talk me down on the price I gave them. I just say “To be honest sir, I do not pad my estimates with room to go lower on my price. If I would have then I could go lower on my price, however, I feel it is much better for my customers and myself if I give them my best price up front so they never feel that they have to try to talk me down”. What could they possibly come back with after that speech? Worst thing that can happen is that they don’t use you and you should be fine with that because you would have made less money that you wanted to make anyway. There are plenty of jobs out there with customers that won’t haggle you on your price. Don’t waste time on the ones that do. Leave those customers for the amateurs. Eliminate the headache from your business wherever you can.
If you need help with actually coming up with estimates for your handyman jobs, theis an excellent tool.