Setting out the perfect price for your flooring job is quite difficult. The pricing strategy should be affordable for your client while keeping satisfactory profit levels for your business.
Many flooring contractors still have no clear picture of calculating the exact price for their job. There are many factors to consider when setting a pricing strategy for your flooring business. Further, the fluctuation of these factors impacts the flooring estimate. So, what is an ideal way to cope with this?
This blog will be your mentor, guiding you through the process of pricing flooring jobs. We will cover the right procedure to estimate your job and details to include in your estimation. So keep a high engagement while reading this blog till the ending words.
How to Price Flooring Jobs? Crucial Steps to Follow
When you create a pricing strategy for your flooring business, you must be very conscious. Here is a proper roadmap to follow to figure out the cost of your flooring services.
1. Finding Your Costs
The initial step is to find out your costs. This ensures that your service charges are enough. You must take care of four main expenses when finding the process to price a flooring job.
- What kind of material will be used?
- What is the per unit price for materials?
- What is the amount of material required to perform the job?
- From where the material will be taken?
1. Personal Living Cost
This covers the expenditure of your living. It covers rent, mortgage, bills, and groceries. You can average out the monthly cost by adding up expenses from the last year and then dividing them by 12.
2. Business Overhead
Business overhead includes the expenses to run your business. Labor costs, material costs, and office expenses are part of overhead costs. Let’s understand material and labor costs.
3. Material Cost
It is essential to determine the cost of the flooring materials you are using for your flooring job. Finding answers to the below questions is very helpful in knowing the cost.
While determining the material cost, you must understand the type of project. A large-scale project will need more material compared to small jobs. That is why it is essential to understand the project well and have clarity on how much material will be required.
4. Labor Cost
Labor cost is another expenditure. You will need to pay your team for their respective efforts. The following two factors justify the labor cost.
a) Your Payroll Structure
What kind of payroll structure do you need to follow? There are two types of options for paying your crew. A salary range for a fixed amount is $36,143 to $45,159. If the workers are working on an hourly basis, the average rate is $20.
b) Project Scope & Complexity
Always determine the project scope and complexity involved in the project. A large-scale project will have more complexity than small-scale projects. The more complexity in the project, the more will be labor cost, as it needs more effort and installation time.
5. Considering & Calculating Tax
Business taxes apply to all professions. These tax charges may vary from state to state. So flooring contractors must check out the tax of your state and federal law. Business and personal tax are the two types of taxes, and you must consider these two taxes as per your living state.
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2. Calculating Hourly Flooring Job Rate
After determining the cost, the next step in estimating a flooring job is to calculate the hourly rate. For this, you need to follow a proper calculation as explained below.
For instance, suppose your average expense is $10,000, and 10% is applicable tax. The next move will be how many hours you work each month. For 40 hours a week, it will be 160 hours a month.
Now we will divide the total expenditure amount by the total hours of a month.
$10,000/160 = $62.5
Now considering the tax of 10%, we will do the calculation like this –
$62.5 x 0.1 = $6.25
So this is the amount you will need to add to the hourly rate of $62.5. The total hourly rate will be $62.5 + $6.25 = $68.75 an hour after considering tax.
3. Add Profit to Your Hourly Rates
When you add profit to your hourly rate, you need to review your competitors. This will be beneficial for you to determine the correct price.
Further you need to focus on the following things when pricing a flooring job on an hourly basis.
Similar competitor
Finalize your competitor who offers the same service as you offer. There will be no perfect cost if the services are mismatched.
Local competitors
Businesses that are within your city or area will be good to consider for competitor research. Outside businesses will be of little use since their prices fluctuate as compared to your business’ price.
Target similar clients
Residential and commercial flooring jobs are quite different. So when you serve residential clients, avoid those competitors who serve commercial flooring work.
4. Offer Discount and Group Rates
Considering discounts and upsells is a good strategy for your business. Check out how you can incorporate them correctly in your pricing. Let’s have a look one by one.
Discount
Similar to other businesses, flooring jobs also need to incorporate discounts. However, you must offer a favorable discount. It means keeping a discount that helps you attract customers without affecting your profit. A good trick is to offer a discount on small tasks rather than targeting big tasks.
Upsells
Upselling is a method of attracting potential clients’ attention by offering additional services. You can include your service details in your estimate. This strategy will enhance your chances of gaining a profit.
Group Rates
While offering group rates, you must target old homes that need flooring jobs. Business professionals can easily acquire a large number of clients through this strategy. Always offer a discounted service to old homes because old homes mostly require flooring service. After a proper analysis, you can determine how to price flooring jobs that give you a satisfactory profit.
What Things to Include in Your Flooring Job Estimation?
When you create a quotation for your flooring job you must add the following details.
- Business details – Always include your business details – business name, address, and contact details.
- Client details – Including client details – client name, address and contact details
- Estimate details – Estimate number, estimate date, & currency
- Service details – Mention details of your flooring job services and a breakdown of applicable costs and discounts.
- Tax – Include the applicable tax
- Note – Always include notes or terms & conditions in your estimate.
To create a perfect estimation, you must choose a professional flooring job estimate template. Always find customized templates from reputed billing software like Moon Invoice.
Best Tips for a Successful Flooring Project Estimation
A perfect estimation is very important for business success. It contributes to adding profit while maintaining a healthy relationship with clients. Here are some tips you can follow to create the best flooring project estimation.
- Keep a clean consistency for a better understanding
- Always be careful while measuring the area. Accurate measurements give accurate costing
- Choose the right estimation software and choose a free flooring estimate template
- Prepare a scalable estimate for large flooring projects
- Always break down the applicable costs to enhance clarity
Some Hidden Costs for Pricing Flooring Jobs
Logistical Overheads
There are some logistical costs applicable to your project which are as follows:
- Preliminary site visit
- Auditing the site
- Transport of material, crew, equipment, and specialized tools
- Buy specialized tools and machinery
Complexity In the Job
Cost also depends upon job complexity. The following ways are common factors in flooring business complexity.
- Irregular shaping of the floor area
- Presence of steps
- Installing aesthetic features
- Working at a high level of precision
Paperwork Costs
To process your flooring job, you must acquire permission in an official written form. Due to this, you need to involve the local authorities and perform paperwork. This gives you additional costs. Furthermore, getting business insurance is another factor in hiking costs.
Preparation Cost
There are a lot of arrangements needed in the flooring project. It is beyond floorboards, tiles, and concrete. You need to perform some actions before laying a new floor.
- Remove and demolish the existing flooring
- Remove and replace the existing physical items on the floor
- Repair or install new subfloors
- Electric wiring and drywalling are other works that increase the cost
How Profitable is a Flooring Business?
After incurring operating costs, there is a 20% operating profit margin. Various expenses are associated with running a successful flooring installation business. Some of them are as follows.
Wages: Some expenditures which are related to management and staff salaries are some hidden expenses. The expenditure rate in this case is 20 to 30% of revenue.
Cost of services: Expenditure related to material, labor efforts and other project specific costs.
Additional Expenses: Office rent, utilities, and supplies are some expenses related to administration actions. The expenditure range is 5 to 10% of revenue.
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Wrapping Up
When it comes to how to price flooring jobs, one must do it carefully. No matter how long it takes, an accurate and clear estimate will be beneficial for your business. Follow up on a proper strategy and research before crafting an estimate.
Moon Invoice is one of the best estimating software. Find out about 66+ estimated templates that are made to cater to your needs. Try it today!
Frequently Asked Questions
Jayanti Katariya is the founder & CEO of Moon Invoice, with over a decade of experience in developing SaaS products and the fintech industry. He holds a degree in engineering. Since 2011, Jayanti's expertise has helped thousands of businesses, from small startups to large enterprises, streamline invoicing, estimation, and accounting operations. His vision is to deliver top-tier financial solutions globally, ensuring efficient financial management for all business owners.
