Tag: setting the right rate

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Why It’s Vital Not to Over-Quote

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The risks of quoting too high

how to quote correctly builder labourer carpenter tradesperson tradie tradesman

THERE ARE PROS AND CONS to charging a day rate. But part of charging the right day rate involves quoting jobs correctly.

Part of charging the right day rate involves quoting jobs correctly.

And what are the requirements for quoting a job properly? You need solid experience in the field you work in, and the ability to evaluate a job thoroughly to ensure you’ve accounted for all the things could crop up once work commences.

Beware of over-quoting

Yes it is important to take into account things that could come up after you start a job that might require additional materials and time. This said, don’t factor them into your quote unless you’re reasonably sure they could occur. If you do, you risk your quote being too high.

Providing someone with an unnecessarily high quote reduces the likelihood that they’ll accept it, which only just ends up costing you money — you spent time working on the quote, after all.

Quote what the market will bear

If you’re an experienced builder, your hourly rate is going to be much higher than a labourer’s, who is paid between $20 and $30 an hour. If you’re quoting for a job that requires substantial digging, which is time-consuming, but ultimately, unskilled work, subcontract that out to a labourer, to keep the price to your client down.

Again, you’re unlikely to have your quote accepted if you’re quoting to do all of the work yourself at your regular rate. Most people will get more than one quote, so if you’re quoting above what the market rate is for a given job, you probably won’t get the work.

Make your quote easy to accept

Use electronic accounting software like Xero, MYOB or QuickBooks to create estimates that you can email to your clients while you’re still talking to them. This means they’ll be able to ask you any questions about the quote, and possibly even accept it on the spot.

Use electronic accounting software like Xero, MYOB or QuickBooks to create estimates that you can email to your clients while you’re still talking to them.

This will reduce the amount of estimates you have to spend time following up on, and also help you to better structure your work as you’ll have a more steady flow of work.


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The Pros and Cons of Charging a Day Rate

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When charging a daily rate pays

tradesmen carpenter painter plumber electrician charge day rate or hourly rateCHARGING A DAY RATE FOR YOUR WORK, instead of an hourly rate, can be a good way of making sure you get paid a certain amount for each job. This can help you set a budget and ensure you’re bringing in a certain amount of money each week. It also gives your clients some peace of mind, because they will know how much to set aside to pay you.

Charging a day rate can help you set a budget and ensure you’re bringing in a certain amount of money each week.

But just as there are advantages to charging a day rate, there are some disadvantages too.

Pros of day rates

  • You’re getting a flat fee, so if the job doesn’t take as long as you anticipated, you’re still getting paid the same amount to complete it.
  • It’s easier to get clients, because they’ll feel more secure knowing from the outset how much the job will cost.
  • It gives structure to your finances, which is important when you’re first starting out.

Cons of day rates

  • It ties you down to one job. Sometimes you can earn more money by doing a number of smaller jobs in one day, rather than just one job.
  • It gives you less flexibility to leave the job site, say, to quote on other work, or if any other circumstances arise that mean you have to leave the job periodically. It might not be convenient for you or others to make up extra hours at another time or extend your day.
  • If a job runs longer than anticipated, or is more specialised than anticipated, you could find yourself out-of-pocket or not getting paid as much as you could.
  • If you run into a previously unforeseen problem or specialised area, it can be difficult to get the client to pay more than what you originally agreed on.
  • You must quote thoroughly for the job beforehand, so you need to be experienced to ensure you’re quotes aren’t too low.

Not all projects are well-suited to charging a day rate, particularly if they’re complex and have the potential to be time-consuming.

Jobs that are straightforward or where most of your day will be spent doing labour work are better suited to day rates, leaving the longer, more intricate work that has the potential to take a long time to an hourly rate.

If you want to work out how to set budgets and what kind of rates you should be charging to cover all your on-the-job expenses, get yourself trained up in one of our online cloud accounting courses in MYOB or Xero.

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