There’s much that goes into a plumbing job beyond the service itself. One of the most crucial components is pricing. Plumbing businesses must accurately charge for their plumbing services, estimate the time required for a job, identify the complexity of the job, and know how to factor associated costs to remain profitable. Staying on top of these aspects can be the difference between a job that contributes to the bottom line and one that ends up losing your company money. Discover how to price plumbing jobs to earn more money and why it matters or check out this demo to discover the powerful capabilities behind Sera's field service management software.
What Is an Estimate?
An estimate is a calculation of the probable costs for a service. It’s important to note that an estimate is not solely an educated guess where plumbing professionals eyeball a quote. Instead, it’s based on a series of information and calculations that contribute to the financial responsibility of the provider and customer.
Furthermore, estimates are not legally binding, meaning pricing can fluctuate if costs change or the scope of the work changes. In some cases, plumbing contractors and journeymen will offer multiple estimates to account for various scenarios.
Plumbing repair and installation estimates are a direct reflection of your business. Therefore, they should be treated like any other professional document. Therefore, in addition to pricing, plumbing estimates should also include the following information:
- The name and logo of the plumbing company
- The business’s contact information
- The client’s name and contact details
- Quote or estimate number
- How long the estimate is valid for
The Importance of Accurate Estimates
The plumbing industry is an incredibly crowded space. Master plumbers occupying the same service area are competing for the same customers. Often, potential customers request estimates to gauge their financial responsibility for a service and to help decide which provider to hire. Estimates and plumbing pricing breakdowns can be the deciding factor in securing new customers or losing business to your competitors.
The ability to provide accurate estimates benefits your plumbing business in several ways, such as:
Establishes Transparency
Estimates include all service details and their price breakdowns. This level of transparency helps to build trust with the customer and reduces the risk of clients claiming unexpected wages when it’s time to collect. Providing an estimate for your services helps to improve the overall customer experience and establishes a healthy foundation for future business with the customer.
Assists with Budgeting
In addition to giving customers a clear understanding of the potential costs for plumbing jobs, estimates help plumbing professionals budget accordingly. Having a good understanding of what resources and assets will serve what projects will help you better plan for future jobs. By understanding cost implications, you can distribute manpower and materials more efficiently to maximize profit margins.
Sets Expectations
The detailed outline of a plumbing estimate sets expectations for both the customer and the plumbing service provider. Making the upfront costs of a job clear outlines the scope of work and prevents misunderstandings to ensure a smoother project from start to finish.
Pricing Components for Plumbing Jobs
Before licensed plumbers begin providing quotes for jobs, it’s important to understand pricing components. The pricing factors of plumbing work can include:
Labor Costs
Labor costs include the number of plumbers needed to complete a job. Generally, the more complex and extensive a project, the more plumbers are required, and the more you will need to charge.
Business owners can estimate labor costs by determining the number of plumbing professionals needed and the number of hours it will take to complete a job to get the labor time. Labor costs are calculated by multiplying labor time by the plumber’s hourly labor rate, including taxes, workers' compensation, and other employment costs. Some plumbing companies choose a flat rate instead of an hourly rate.
Material Costs
The materials required to fix a plumbing system will contribute to the total cost. Different types of jobs warrant different materials. Typically, the following repairs and installations require the following materials:
- Water heater installation: Water heater unit, venting pipes, pressure valves, water and gas piping, thread compound, and solder
- Clogged drain: Declogging devices and chemical cleaners
- Leaking faucet or pipe: Replacement pipes, slip coupling, and pipe clamps
- Burst pipe: Fittings and connectors
To calculate the cost of materials, plumbing businesses can use the formula:
Unit Cost x Quantity x Local Sales Tax = Total Material Cost.
Using this formula ensures all materials needed for a specific job are accounted for.
Overhead Costs
Overhead expenses are the operating expenses associated with running your plumbing enterprise. Simply put, these expenses include any costs your business incurs during normal business hours, such as:
- Rent
- Office equipment
- Plumbing tools
- Business vehicles
- Licensing and certifications
- Taxes
- Business insurance
- Marketing and advertising expenses
- Field service management software
To calculate your hourly overhead costs, use the formula:
Total Monthly Overhead Costs ÷ # of Billable Hours per Month.
Based on this formula, if your overhead costs total $5,000 and you produce 500 billable hours monthly, your overhead costs would be $10 per hour.
Additional Fees
Depending on the type of plumbing job and the job site, additional fees may be involved. These fees can include building permits, disposal of materials, travel expenses, and other additional costs. These extra expenses should be accounted for and included in plumbing estimates.
Calculating Total Costs
Once you’ve figured out all associated costs for a plumbing service, you can add them up to get your plumbing cost estimate. This number represents what you will spend on a job. To make a profit, plumbing businesses include markups. The markup amount plus the total cost of the job is what the homeowner or commercial property owner will pay. The amount you markup depends on your desired profit margin.
Improve Your Plumbing Estimation Process with Sera
While plumbing estimates are a crucial component of the business, they are often time-consuming tasks. Plumbing contractors can streamline this process with estimating software from Sera. Instead of needing to perform these calculations yourself, we automate this for you to provide accurate quotes every time.
We specialize in helping plumbing companies save time and money through innovative software solutions. By enhancing efficiency, you can improve customer satisfaction and drive sales. Contact us today to schedule a demo.
