Pricing a job for the first time can be difficult and nerve-wracking. While it can sometimes be a tedious job for seasoned professionals, this is especially true for new and/or inexperienced employees. If you don’t have a written, standardized price book that details the cost of labor and job costs, an employee may underbid or overbid a job.
When a job is underbid, it comes at a loss to the company. If this happens too often, it can cause a severe loss in profit and negatively affect the financial position of the company.
When a job is overbid, it causes dissatisfaction to the customer and if it is a recurring element, could signal theft from an employee, especially if the customer has nothing but the employees word with which to validate pricing. If left unchecked, this can also cause a loss in profit and affect the financial position of the company.
A price book that is written and standardized across the company allows the customer to purchase with confidence knowing that the price they are given is not higher or lower than what the company charges. It also fosters trust towards the employees and maintains a high level of honesty and integrity in every job.
When a client considers whether or not to retain the services of a company, they evaluate the cost of labor and the services that are being performed. This includes the price of labor, materials and warranty on the completed job. The price book be current and reflect the current prices that the company offers.
Make sure your price book is current and doesn’t reflect old price structures that may be out of date. You will lose profit and potential clients may be suspicious of a bid that is priced too low, wondering what kind of quality they can expect at such prices. Once you’ve committed to a price, it will be difficult to increase prices on future job so make sure to evaluate your price book regularly.
During this evaluation, it can be helpful to think in terms of the value your good or service contains from the perspective of the customer and not your own. If you’re meeting a real need in the client’s life, it may be more valuable than you realize.
If you’re wanting to assemble a price book for your company, or reevaluate the one you currently use, contact us for a consultation.