It’s no secret that plumbers are expensive, and maybe that’s what got you into this field of work. The costs reflect your extensive training, years of experience, and the value you provide your customers, whether it’s replacing a toilet, repairing a leak, or installing a water heater.
Plumbers often struggle to accurately estimate jobs, leading to discrepancies when the final bill comes. This can be problematic on either side of the spectrum - you want to make sure you’re earning what you deserve without overcharging the customer and losing the gig.
That’s why we’ve created this guide on how to price plumbing jobs to save you time and stress, helping you effortlessly estimate jobs. It’s as simple as adding up all your costs (labor, materials, and overhead) and applying whatever markup you decide on.
Learn more below, including how to charge for plumbing jobs after you’ve agreed to a price with the customer. Our plumber invoicing software streamlines this to create a frictionless payment process for the customer and help you get paid faster while reducing administrative overhead.
InvoiceSherpa is the best accounts receivable automation software for any business looking to simplify and enhance their financial management, but especially for plumbers. See why for yourself with a free trial today!
Creating accurate plumbing estimates is crucial for both your business and your customers. It helps avoid underpricing or overpricing your services, each of which has its own problems.
Providing precise and clear estimates will leave customers more confident in your services, reducing the likelihood of disputes and misunderstandings. This demonstrates your expertise and commitment to transparency, which can lead to repeat business and positive referrals.
But perhaps more importantly, it ensures you’re fairly compensated for your work. Factoring in all the necessary costs, including labor, materials, and overhead, allows you to set prices that reflect the true value of the service you’re performing.
This not only helps in maintaining a competitive edge in the market but also supports the financial health of your business. There’s a fine line between not charging enough to grow your business and charging so much that customers end up getting a quote elsewhere instead.
Don’t worry, you can effortlessly find the sweet spot with our tips on how to price plumbing jobs below!
The advice for plumbers trying to price their jobs is not any different from other businesses, like how to charge for landscaping. It’s just a matter of covering all your costs and then some, leaving you enough profit. Here’s an overview of how to price plumbing jobs.
The costs of labor are the most significant in providing plumbing services, so start there. Estimate the hourly rate for your services, which should reflect your skill level, experience, and the going rates in your area.
Then, multiply this rate by the estimated hours required to complete the job. Make sure you include time for both the actual work and any additional tasks such as setup, cleanup, and travel.
Next, calculate the cost of all materials needed for the job. This includes pipes, fittings, fixtures, adhesives, and any other supplies. Contact suppliers to get the latest prices and consider any potential fluctuations in material costs.
If a job requires special-order items or expensive materials, make sure to factor these into your estimate. Providing a detailed list of materials in your estimate can also help in explaining the costs to your customers.
One of the most common mistakes we see plumbers make is failing to account for overhead costs. These expenses aren’t necessarily associated with a specific job, but they add up and should be included as well.
This could include insurance, utilities, vehicle maintenance, office supplies, and marketing. To accurately account for overhead, calculate your total monthly overhead costs and determine what portion of these costs should be allocated to each job.
A common method is to add a percentage of the total job cost to cover overhead. Whatever approach you take, just make sure you’re not overlooking these costs. Otherwise, you could discover that your business has a profitability problem when running the numbers at the end of the month.
Once you have calculated labor, materials, and overhead costs, add them together to get the total cost of the job. Double-check your calculations to avoid any mistakes that could impact your profitability.
This ensures all costs are covered and that the markup you add in the next step actually goes into your pocket - not towards covering costs.
This is the amount you add to your total costs to arrive at a profit. The percentage you choose for markup depends on various factors, including your target profit margin, market conditions, and the competitive landscape.
Your level of experience will play a role here as well. The markup can be a moving target that changes on a per job basis - for example, if you’re performing a service for a repeat client you might shave a bit off to thank them for their loyalty.
A common markup range for plumbing services is between 20% to 50%. Applying a consistent markup helps you maintain profitability and provides a buffer for unexpected expenses.
Now, you’ve got the actual price for the job - but at this point, it’s just an estimate. It’s subject to change, and that must be communicated to the customer just in case anything changes in the specific materials you need or you run into roadblocks in the service that make the job take longer.
Still, present your estimate in a detailed and transparent manner, breaking down the costs into labor, materials, overhead, and markup. Explain any additional charges and provide a clear timeline for when payments are due.
We’ve covered the basics for how to estimate plumbing jobs, but there are so many moving pieces in pricing your services that may come into play as well. Some common examples are:
That being said, you now know how to price plumbing jobs accurately! But now what? You need a reliable means of actually billing your customer when the work is complete. So, let’s get into how to charge for plumbing jobs after the fact.
Actually invoicing customers and collecting payments is a separate challenge, but one that is equally important to estimating jobs in the first place.
Here’s how billing automation software can save you time and stress while getting you paid faster and providing a better experience for your customers.
Efficient billing processes help you get paid on time, reduce administrative burdens, and maintain healthy cash flow. If you don’t know why cash is important to a business already, it’s a matter of fulfilling day-to-day obligations while fueling business growth - it’s not something you should take lightly.
So, how does your billing process play a part? A well-organized billing system allows you to issue invoices promptly, track outstanding payments, and manage your finances more effectively. It also enhances your professionalism, ensuring clients trust your business practices and feel confident in paying for your services.
You should make sure your invoices are clear and itemized so the client knows exactly what they’re paying for. That includes detailed breakdowns of the scope of work, materials used, labor costs, and any additional fees, such as the maximum invoice late fees by state.
It should also allow for easy follow-up on overdue payments, helping to minimize the time and effort spent on chasing payments. This is something our overdue payment reminder email sample can help with.
Given how much goes into invoicing, you may consider AR management services. But these can be quite expensive and cut into your margins. You’re better off using AR automation software, which can do the same thing at a fraction of the price.
But what is AR automation software, and why is InvoiceSherpa the best automated invoicing system?
InvoiceSherpa is a leading accounts receivable automation software designed to simplify and enhance the billing process for plumbers and other service-based businesses.
You can customize every aspect of the billing process, from your invoices themselves to the late fees you apply and your invoice late fee policy wording. You can set up structured payment reminder emails and text messages too to help you collect late payments in a timely manner.
You won’t deal with nearly as many headaches getting clients to pay, though, as you can make it easy for clients to pay directly from the invoice via credit card and ACH. Reducing friction for the customer encourages faster payments and provides a better experience.
Clients even get their own customer portal where they can view, pay, and manage their invoices. If it makes sense for your business, you can set up recurring payments as well.
The software integrates seamlessly with major payment processors like Authorize.net, PayPal, and Stripe. You can also integrate with your accounting software for automatic accounts receivable reconciliation, whether you use Quickbooks, Clio, or Xero.
The accounts receivable automation solution costs start at just $49/month, so you can reap the accounts receivable automation benefits without straining your profits. But why take our word for it when you can see the system in action with a 14-day free trial?
Learn more about how to automate accounts receivable, including the AR automation best practices, accounts receivable automation use cases, and accounts receivable challenges and how automation can help in our blog.
Otherwise, take the first step towards effortlessly charging for plumbing jobs today.
That does it for our guide on how to price plumbing jobs. Accurate estimates can make or break your business, which is why you need to be able to quickly tally up all costs - labor, materials, and overhead - before applying your markup.
Then, communicate the estimate with clients and make sure to provide a detailed invoice, ideally, through our software here at InvoiceSherpa.
Want to gain more accounting tips and tricks? Read our blog to learn about the accounts receivable formula, demand letter for payment, unbilled revenue, forecasting accounts receivable, how to send a bill to collections, or how cash flow problems usually start.
Or, streamline your billing process in just a few clicks with InvoiceSherpa now that you know how to charge for plumbing jobs. It’s quick and easy, and you’re setting yourself up for more timely payments, less administrative burden, and a better customer experience.
Start simplifying your invoicing process with InvoiceSherpa today!
August 8, 2024
