Industry sector:

Fencing contractor: Pricing

First decide how you will charge for the work you do. There are different ways of charging, often depending on the type of work done. Here are some examples:

  • charging for your services (and those of any employees) on an hourly or daily basis, adding to this the cost of any goods and materials you supply
  • charging for fencing and boundary work at a standard inclusive price per metre that you have worked out. This price will probably vary depending on the type of fencing to be installed
  • charging for other services at a standard rate that you have worked out. For example, you might hire out certain items of machinery and equipment at a set daily or weekly rate

Think about the things that your prices will include, and the things that will be charged for as extras. For example, will you charge your customers for dismantling and removing any old fencing, or will this be included in your standard price?

Commercial customers may expect you to offer them a special 'trade rate'. Large organisations like local authorities that invite firms such as yours to tender for contract work will expect your rates to be very competitive. Insurance companies will also expect very competitive prices. You might decide to offer special discounts to certain types of customers, for example pensioners.

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 services? Do they calculate their prices in the same way as you do
  • 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
  • will you make a profit on fencing materials and other goods 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
  • will you make a delivery charge for goods and materials that you sell on a 'supply only' basis
  • what will you include in your prices, and what will you charge for as an extra? 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 firms, so you need to be able to quote accurately and competitively. However, don't cut your own throat. Many clients value good quality workmanship 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!