How to quote to make more profit

Even though there’s a lot to love about being in the painting business, we’re not in it for the fun of it. It’s how we make a living. That’s why getting your quotes right is an important part of the job. Get it wrong, and may end up watching your all your profit go down the drain.

The first step involves understanding the true cost of completing the job. Profit is the difference between the amount earned and your costs. While most of us go through a formal quoting process, it’s always good to have a little reminder of what to consider to increase your profits.

Ultimately, every business has to make more money than it spends. When creating quotes in your own painting business, how closely do you factor in the following 5 elements?

1. Direct materials cost

2. Indirect material cost

3. Direct labour cost

4. Indirect labour costs

5. Additional overheads

1. Direct materials cost Direct materials cost is exactly that: the costs associated with the materials needed to complete the job. For painters, the cost of paint is an obvious one! Every material used on every job should be included. When you’re in business, you don’t give things away for free!

2. Indirect material cost Costs that can’t be specifically traced to any specific job are referred to as indirect material costs. Even so, you need to include them in your quoting process for each job. For example, your indirect material cost could be glue, sandpaper or cleaning materials.

3. Direct labour cost Labour (hourly rate) costs are incurred as a result of the service provided. It includes wages at the operational level. Labour-related costs, such as overtime premiums, sick pay and holiday pay. Generally, this will normally stay the same for most jobs (apart from overtime). electricity/power rates, insurance, repairs and depreciation. Now we’ve covered the elements involved in quoting, what are the benefits?

Benefits include: • Increased profitability. Once you know the breakeven price of each job, you can price specific jobs for a profit accordingly and also direct marketing efforts towards the most profitable ones. • Improved employee performance. By looking at direct labour for each job, you’ll now gain insight into how long each employee spends on each job. This can inform how you assign jobs. • Ongoing monitoring of costs. By allocating costs to each job, review them constantly. As such, you’ll better understand where to tweak your quotes to make more profit.

Do you know if you’re making money on each job? It’s always helpful to go back to basics to find out.

4. Indirect labour costs Indirect labour represents the wages of any supervisors and admin staff. While they may not be physically involved in providing painting services within your business, these important team members will still be paid a salary/wage from the business.

5. Additional overheads Your additional overheads may include expenses such as rent and

www.nextleveltradie.com.au/aussiepaintersnetwork for our schedule of live events, which includes a focus on quoting for profit.

Angela Smith Co-founder Lifestyle Tradie.

Lifestyle Tradie is an award-winning education program for trade business owners. Make more profit and fast-track freedom.