How to Price a Plumbing Job: A Simple Formula for Quoting
While experience and industry standards are a good gauge for determining the time and materials you’ll require to complete a given residential plumbing job, there’s plenty more to consider.
For a small, scheduled job with easy access to pipes etc., one hourly rate may work. An emergency call-out to an older home with a flooded basement and galvanized pipes may merit a different rate altogether.
With research from around the web, here’s some advice from pros and one simple formula for quoting residential plumbing jobs.
Plumbing Quotes: What to Think About
Before you set a rate you’ll need to figure out how you much need to pay your bills and remain competitive. Is it just you on the payroll, or do you have an apprentice, or second truck to consider? Do you offer a free inspection and quotation? If so, you’ll need to factor lost opportunity for that time.
It’s a good idea to quote services in minimum chunks of time. Many plumbers set their per job minimum at an hour or two, which is enough time to install a new toilet, or quote a standard block of time, like five hours for plumbing and installing a new tub.
Of course, no plumbing quotation should be offered before you’ve had a chance to examine pipes, assess their general condition, and sort out how easy or difficult they may be to get at. It’s often this sort of challenging condition that quickly adds unforeseen work hours to a job, resulting in ballooning charges for your client, or a loss of profit for you.
That’s why it’s important to lay out for your client on what’s not included in your quotation, and educate them on how common scenarios you may encounter while on the job may add to expenses.
Factoring extraordinary expenses
Basic materials, fixtures and such are easy enough to explain, but your customer is less likely to be prepared for some other possible additional expenses, as are outlined below.
According to ThePlumbingInfo.com, these are some of the most common elements plumbers forget to factor-in when quoting a job. Each and every one of them add a hard expense that will cut into your profitability if your customer isn’t prepared to cover the costs:
On-site dumpsters and removal of debris
If there’s not a general contractor supplying an on-site dumpster and haul-away, you’ll need to deal with getting site spoils to a barrow pile
Correction of existing plumbing code violations
This is particularly relevant when working on older or neglected properties. You must factor additional expense, calculate the required profit on the work, and communicate the adjustment to your client. Doing this well makes you a pro in the client’s eyes. Doing it poorly may get you called a cheat.
Protection of homeowner’s other property
If, in the process of completing a job in the kitchen, a pipe bursts in the basement and the owner’s flooring is damaged as a result, are you on the hook for that expense? A temporary protection exclusion makes it clear that you are only responsible for specific jobs and work areas.
Removal or replacement of deteriorated piping
It’s not unusual to find old, galvanized metal piping in older homes. If, when working a job, common sense dictates updating with PVC, be prepared to make that recommendation to the client, but not until you’ve priced out materials and calculated additional labor expense.
A few other things to keep in mind:
- X-raying of floors or walls prior to cutting or drilling
- Provision of backflow prevention devices where required
- Opening, repair or replacement of walls or ceilings required to complete work
- Time required to shut down, drain and refill domestic water piping, etc.
Now that you know what factors to keep an eye out for, let’s move on to the actual estimating.
Here's an easy way to price a plumbing job:
- Determine your base hourly rate by writing down how much you want to make per week and dividing it by the number of billable hours you can work.
- Calculate your overhead and profit margin, then add that to your base hourly rate. This is your net billable hourly rate.
- To bid a job, gather the exact material costs, including taxes, permits, and any extraordinary expenses outlined above.
- Figure out your total labor hours and multiply that by your hourly rate.
- Add the numbers from steps 3 and 4 together. The final number is your quote.
That seems pretty simple, but how does the equation translate in real-life?
1. Determine your base hourly rate by working your way backwards
On PlumbingZone.com, Plumber Bill Parr of Parr’s Plumbing in Allentown, Pennsylvania, offers a formula that provides a good basis for independent plumbers to calculate a quote. Start by working backwards from your ideal weekly take-home.
Let’s say you want to walk away with $800 per week based on a 40 hour work week. First, assume you are going to lose about 30% (12 hours) of billable productivity driving around, dealing with admin stuff, etc. That leaves you 28 hours per week productive time.
$800 per week divided by 28 billable hours = $28.57; this is the minimum you need to charge per hour, but you still need to add in $s for taxes, vacation time, insurance, the equivalent of a pension, etc. (this is called your ‘labor burden’), so we’ll round that up to $40 per hour
2. Calculate your overhead and profit margin
Now you need to figure out your overhead—that’s the cost of keeping your truck on the road, lights on at your shop, marketing etc. Adding that all up you want to count on at least another 30% ($40 x 30% = $12), so now we’re up to a net $52 per hour you need to be billing just to break even on expenses, including your weekly wage. Of course, you want your business to make a profit, don’t you?
If your ideal profit is 25% after all is said and done, calculate 25% of our fully loaded hourly rate ($52 x 25% = $13), and add that to the top-line, giving us a net billable hourly rate of $65—a fair and competitive rate for residential plumbing in almost any North American market.
Time to calculate!
3. To bid a job gather all of your costs
Get exact material costs, including taxes, and add in any required permits, subcontracting, or extraordinary expenses as we’ve outlined above (let’s say this totals $850).
4. Figure out your total labour hours
Next, determine the total amount of labour hours you’ll need to complete the job (let’s say 10) and multiply that by your hourly rate (in our example, $65, or $650 for the job).
5. Add it all up
Add 1 ($850) and 2 ($650) together and you have your quote: $1,500 + taxes.
That’s going to give you enough to buy required materials including taxes, contribute to the wage you want to take home weekly, cover your overhead, and earn a net profit to reinvest in your business.
Follow this one simple formula and do a good job of explaining to customers everything that goes into providing your plumbing services and you are well on your way to mastering the art of quoting.