Quoting, Tracking Jobs or Projects in Plumbing Business
Estimating is fundamental for any plumbing business to be successful in a service based business as potential clients will almost certainly request a quote from you prior to awarding a project.
If the job has been priced correctly, then it is fair to say you’ll make a decent profit. Get it wrong, and you may lose money and unfortunately, in some cases, much more.
So, what’s the solution to reducing the risk of falling into the trap of under-quoting projects? Simple: be consistent and know your bottom line.
How the standard rate of method of quoting in Plumbing Business
There are a few different ways plumbers price a project, each have their advantages and disadvantages. The most common is educated guessing. This is when you look at the project and from past experiences of a similar job. `This is a very historic form of quoting, as it’s impossible to know the projected profit margin. Another is per point pricing. This where the total number of fixtures (points) are tallied and multiplied by an amount resulting in the project price. These methods of pricing are quick and easy, but maybe dangerous as they don’t take into consideration the different requirements of each project.
The most accurate form of estimating is the ‘standard rate method’ as it creates a consistent benchmark for each individual component of the project. The advantage is that each standard rate can be easily modified (if required) to suit the different site/project conditions.
This type of pricing is quick, accurate, flexible and completely transparent.
STEP-1: Measure a complete take-off for the project and enter the details/quantities into an estimating program. This will result in having the ‘first cost’ of the project, which is the cost to install all the required works (labour, materials, excavation and backfill).
STEP-2: Add the ‘preliminary costs’ of running the project (supervision, wet weather, floating equipment, etc). This is usually entered as a percentage (from my experience around 8% should cover the prelims).
STEP-3: Add your businesses ‘overhead cost’ (cost of running your business verses the turnover) and add it as a percentage. An average sized plumbing business may have an overhead cost of around 14%, but your accountant can give you this information. The total of the above (first cost, preliminaries and overheads) is the absolute bottom line of the project.
STEP-4: The final and most important step of the entire process is to calculate and add the projected profit you wish to make on the project (for the sample below we are using a 10% profit margin). This is entered as a percentage, which will calculate the dollar amount of the expected profit.
At Libabun Accountancy , creating a quote is very easy as we use XERO accounting software in preparing your quotes. You can create template in your quotes, or copy from your previous jobs. Create your quotes instantly as your materials, prices are available online. Convert these quotes to invoices in just one click so you have the option to issue the invoice to your client onsite or send it electronically to their computer or mobile phone.
PLUMBING BUSINESS TRACKING YOUR PROJECTS OR JOBS
Most of the time, your expenses quoted in your invoice do not equal to your actual expenses which are due to sudden changes in price, unquoted materials, additional material requirements, etc. Very often these additional expenses or differences are not reflected in your project or left unrecorded which gives you inaccurate profit in your job or project.
Here in Libabun Accountancy, we use project management tool designed to keep track of all of your time and costs. Then from there, you can issue invoices based on a percentage of the total fee, time & materials incurred to date, or the entire project all in one go. It makes it super easy to keep track of how much you have invoiced the client. But it also makes it super easy for the client to know how much they should be paying you. As an example, they pay the entire deposit invoice of £100, instead of paying £100 of your £1000 invoice, with some amount to be paid who knows when.
Why we love XERO Projects
If you run a business, time is money. Knowing whether you’re gaining a return on your time is what Xero Projects is made for. Making sure that you are seeing a return on each and every job you complete for your customers.
Here are some more reasons why XERO Projects is perfect for your plumbing business:
Real-time view of profitability
Monitor and track performance with an up-to-the-minute dashboard view so you keep jobs in budget and ensure every project is profitable. Our new dashboard in Xero Projects gives you at-a-glance views of your profitability on each job in real time. You can clearly see all invoiced work and the status of each invoice, as well as any costs associated with that project, such as time or materials.
Win new work with professional quotes
Estimate your time and costs, and then send through a quote for approval in just a few clicks. Choose the exact level of detail you want to show your customers. You can customise your quotes including a breakdown of estimated costs. Your customers can accept the quote with the click of a button.
Streamlined time and cost tracking
Accurately track time on-the-go with stop-start timers and location-based tracking on mobile – no more chasing timesheets. Seamlessly link costs to projects so you know exactly where every dollar was spent. You can set an hourly cost rate for each staff member, so it’s easy to calculate overall profitability on a project.
Pay employees based on tracked time
You can load time recorded in a project directly into Xero Payroll – avoiding duplication and ensuring staff members only record time once, in one place.
Get invoicing right every time
With all your project information in one place, you can create fixed price, time and materials or progress payment invoices. Details can be uploaded automatically, saving you time and avoiding errors.
XERO Projects is easy-to-use, mobile-friendly job tracking tool right within Xero. Quote, track, invoice and monitor how much money you’re making with Xero Projects
It’s an easy-to-use job tracking tool that will help you reduce the frustration of tracking time and expenses against jobs. It makes it simple to quote for work, manage invoices and monitor job profitability, all in one place. And, you can be confident the numbers add up with your project financials seamlessly integrated to the single ledger in Xero.
If you need more information how XERO Projects can help your Plumbing business , please give us a call on +44 01234 712840.
How Libabun Accountancy can help your business?
We use XERO Accounting Application to record all your sales and bills which are readily accessible wherever you are in the world. You can even access them via Smartphone.
At Libabun Accountancy, you no longer need to worry about missing receipts or unrecorded expenses as we use Receipt Bank application to capture ALL your bills and expenses. Application is also accessible using your Smart Phone.
Our accounting team understands that you want to spend as little time as possible updating your accounts so that you can focus on fulfilling your contracts, winning new business and enjoying your free time. We will help you on your journey with accountancy support and advice to assist you with growing your business.
LibAbun Accountancy has been working with several of businesses of all shapes and sizes across the UK. We have gone to great lengths to listen to the needs of businesses, to invest in technology and to train our client accounting team to deliver a high level of service to new and old clients alike.
Our focus on people, advice and technology has created a leading online accounting experience. We have embraced technology, combining online accounting software with help and advice delivered by a friendly accounting team. We are confident that you will find managing your accounts quicker, easier and more convenient.
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