How will you decide on your prices?
First decide how you will charge for the work you do. For example, you might charge for laying paving and other hard landscaping services, such as macadam and concrete laying, on an hourly or daily basis, adding to this the cost of any materials you supply. Alternatively, you might decide to charge a certain amount per square metre of coverage, varying the charge according to the type of paving or other surface covering used. Your square metre charge might also vary depending on whether you're excavating the site and removing the spoil, or just providing a 'cover only' service.
Clients that are other businesses might expect you to offer them a special trade rate. Large organisations that invite firms such as yours to tender for contract work will also expect your rates to be very competitive.
You may decide to use different methods of costing for different jobs, depending on who the customer is and what type of work you will be doing.
It is very important that you set your charges carefully. You must make sure when deciding on what to charge that, assuming you get enough work, you will earn enough to cover all of your operating costs including your own drawings.
Also consider the following points when setting your charges:
- what do your competitors charge for similar products and services
- do you aim to win business away from your competitors with attractive pricing
- will you vary your rate depending on the type and complexity of the work involved and on the size of the job
- will you make a profit on blocks, paving slabs and other items that you supply or will you pass these on 'at cost'? If you decide to add a mark-up, decide how much this will be
- what will you include in your prices, and what will you charge for as an extra? For example, will your quotations include the cost of skip hire where needed? Make it clear to the customer what your prices do and do not include
You will often be asked to give a quote or an estimate for a particular job. Be clear about which you are giving:
- if you give a quote for a job, that's a fixed price. Once it's been accepted by the customer the price can't be changed, even if there is a lot more work to do than you realised when you prepared the quote. Your quotes should therefore give precise detail of what is covered and make it quite clear that any variations or extras not covered by the quote will be charged for as extras
- an estimate is not a fixed price, it is just your best guess of what the job is likely to cost. You are not bound by it. It is perfectly acceptable to provide several estimates, each taking into account different circumstances from best to worst case scenario
Many customers will want to agree a price before a job is started and will expect you to stick to this.
Be aware that many of your clients will get quotes from several paving firms, so you need to be able to quote accurately and competitively. However, don't cut your own throat. Many clients value good quality craftsmanship and efficient service and are prepared to pay a realistic price for it. Above all, make sure that you don't end up working at a loss because your quote was too low!
Special trade guides are available to help you when pricing all aspects of construction work. They give up to date advice on what rates to charge for particular types of jobs. Some materials suppliers may also help you to work out what quantities you will need for a particular job, and the cost.