Establishing pricing and charging the right amount for services as a fencing contractor is one of the first things you need to nail down.
But pricing isn’t always that simple. There are a lot of factors to take into consideration.
While the lowest price might be appealing for some customers, many see the lowest price as the cheapest value. Quoting too low impacts your ability to scale your fencing business. It also undermines your value.
In this guide, we’ll take you through how to price a fencing job for profit:
It’s time to get scientific about your pricing. You don’t need to reinvent the wheel with every job.
A pricing strategy helps you get accurate with your work so you can reuse and modify your pricing at every job site while turning a healthy profit.
Here’s how to do it:
How to price your fencing services, step-by-step
- Get clear on the scope of work
- Measure the fencing area
- Estimate the material cost
- Estimate labor costs
- Calculate your overhead costs
- Tally all costs
- Calculate your margins for desired profit
1. Get clear on the scope of work
Before you can accurately price any job for profit, you need to understand the full scope of the work. Part of this first step includes calculating your cost estimate vs your cost budget for a quote.
Whether your job location is close to the office or more remote will impact how you should be pricing your quote.
Fencing site size
Measuring the job site is especially important as a fencing contractor. Proper fence site measurements will help you guide your budget and it will better inform your customer. Accurate measurements tell you how much material you’ll need. It can also help you foresee obstruction issues down the road.
Damage, safety hazards, or accessibility issues
Do a complete walkthrough of the property to check for anything that might impede your ability to easily build a fence. Take photos, notes, and attach them to your client’s profile in your CRM.
Your client may want the fence built ASAP. Time constraints like these should be accounted for. If they’re asking for a quick turnaround, you may be able to charge more for the build.
Standard or specialized services
Consider any special requests from your client or prospect that might add more time and costs to the job.
As we mentioned, material type and quantity is a key aspect of pricing a job. Make a list of the materials you need to complete the job before you hand off the quote.
Estimate how long it will take to complete the job
This is huge and it’s what sets apart the amateurs from the pros. Keep a record of how long every job takes you to complete. If you hope a job takes two hours but you know it will take four, be honest with yourself and your capacity.
The better you get at this, the more accurate your time estimates will become. Make a habit of keeping a timecard for yourself, or use time tracking software to make your life a little bit easier.
2. Measure the fencing area
Your materials cost is one of your largest costs. Figure out how many materials you need by measuring your fencing area.
- Locate property lines. A fence might have to come down if it goes up on the wrong property lines. This can cost you a lot more. Make sure that the property lines are accurate according to city surveyors. Some homeowners have their property lines information in their property deed or mortgage package. If your client is uncertain, it’s important to get official documentation on where the property starts and begins before you begin the build.
- Locate obstructions. Some common obstructions could include trees; other permanent property features; or underground utilities like gas, electricity, and cable. Contact your state’s information centers to locate utility lines if you’re unsure. Then, plan around these obstructions.
- Mark corners of the property with a stake. Use tape to connect them and make sure there’s no slack between them.
- Measure the perimeter. Use the stakes as your guide and measure the perimeter of the fencing area.
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3. Estimate the material cost
The material costs will affect the baseline cost of the job.
One mistake business owners make is not doing their materials markup properly. The marked-up price is what you write on the quote — not the materials at cost.
You can do your materials cost calculation first, and then figure out how your markup on those materials after.
Remember that markup and profit margins are closely related. Check out our profit margin to markup chart and learn more about how to better price your materials.
To estimate the material at cost, start by dividing the perimeter by the size of the fencing panels. That will tell you how many units you’ll need for the fence.
Don’t forget the details when finishing up. These can significantly add to the material costs.
For example, most wood fences require posts, rails, pickets, and nails or screws. Your customer might also request stain or paint, gate hardware, or post caps. You might also need to calculate how much concrete you’ll need to set the posts.
Pro Tip: Don’t forget to factor in the height of your fence for your posts. About 30% of your post will be buried in the ground.
4. Estimate labor costs
Labor costs eat up 30% of your revenue. Some business owners try to limit the number of employees or subcontractors on site. Others try to limit how much time their crew is on the job.
However you do it, make sure you calculate labor accurately.
If you’re not sure where to start, reference your experience. Think back to similar jobs and take note of how many team members you’ll really need to get the job done.
Here’s how you can figure out your labor cost:
- Multiply the number of hours needed to complete the job by the number of employees needed on the job. This is your labor hours.
- Then calculate your hourly labor cost. This can be employee’s wages, extra for taxes, worker’s compensation, and any other employee-related expenses. 20% is a reliable markup for an hourly labor cost if you’re unsure.
- Multiply the labor hours by the labor cost to get your labor cost.
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5. Calculate your overhead costs
Your overheads include indirect and direct expenses like accounting, uniforms, office rent, equipment insurance, and fence business operations tools like Jobber.
That’s everything that helps you keep the lights on in the back end of your business. Your price must account for these costs, otherwise, you’ll immediately be in the red.
There are a number of different ways small businesses work out their overhead costs.
Here’s one way you can calculate yours:
- Start by adding up all your overhead costs for a specific time period (one month is ideal).
- Figure out your sales or revenue sum for that same period of time.
- Now, calculate your overhead rate. Divide your overhead cost by your sales for the same time period. This will give you a decimal, or your overhead rate.
- Multiply this decimal point by 100 to get your overhead percentage to see how much of your revenue on average you spend on overhead.
That means that for every sales dollar you make, you allocate or spend $0.357 cents on overhead. So, you need to make this cost up by tacking it on to every dollar of your job cost.
6. Tally it up
Finally, you can add up all of your costs, including your material, labor, and overhead.
7. Calculate your margins for desired profit
Your margin is your net sales revenue minus labor, material, and overhead costs. The higher the profit margin, the more money your business retains.
You can reinvest in your business and employees with that money, which is why it’s so important to focus on it.
If you’re not happy with your margins on the job you have two options:
- Consider the sum of net profits you’ll make over the month based on other jobs you take on.
- Adjust your current price by doing the math again and tweaking some numbers (like markup and overhead).
Fencing job best practices
Focus on materials and your measurements
Material estimates based on measurements are particularly important when you’re pricing a fencing job. At the end of the day, much of your cost is dependent on the materials needed.
Double-check your materials and triple check your measurements. This will help you avoid extra materials trips and it’ll save you money in the long run.
Double-check your math
Don’t make any assumptions when you could do the math instead. And when you’ve done the math, always double-check it.
Double-check your numbers when you’re calculating your labor cost, overhead, and materials. This is where you can catch any mistakes you might have made.
You don’t want to go back to your customer with a new bid because you’ve incorrectly calculated a cost.
Remember your profit margins
Based on your cost and price, you can work out how profitable you are by calculating your profit margins.
Keep overhead as low as possible and consistently check cash flow. This will help you ensure your margins are healthy.
You can quickly do this with our profit margin calculator tool for pricing, cost budgeting, and markup calculations.
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When to adjust your fencing services pricing
A straightforward pricing strategy ensures you’re not spending hours coming up with bids for every job.
As you get better at bidding you’ll have to reassess your strategy often. Take notes when you’re on job sites and organize them so you use them as a reference for the next job.
Multiple things that can impact your pricing, like:
- The economy: inflation impacts the cost of doing business, which is a major factor you’ll have to take into account when setting your prices.
- Wage expectations: the hourly wage rate changes consistently. Keep this in mind when you revisit your strategy regularly.
- Competition: as market rates change, you need to change with them.
- Availability of materials: some materials might require special order and some might be sold out.
If you notice that your time estimates are consistently wrong, think of what might be missing. Consider setup time, material handling and pickup, how long it takes to lay out the job, clean up time, etc.
Your job notes and records will be a huge resource to help you perfect your pricing to see what was successful and what wasn’t.
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