Estimating carpentry work in the beginning is not easy. Normally when I used to get it wrong it was by underpricing too, which is the worst thing!
I certainly don't want to work for free.
In order to be able to accurately calculate carpentry job prices you need to first decide on a daily and/or hourly rate that you want (and think you are worth) to earn. The most important thing to do is to add to this amount all the costs your business incurs.
To work out your costs, add up everything you have to pay for in a year to run your business. Keep the receipts for everything you buy that is related to running your business, even things as small as stamps and staples, they are all costs that need to be allowed for and these should be factored in when you are estimating carpentry jobs. The good thing with having your own business is that these costs are all tax deductible, so you won't pay tax on the money you have to earn to pay for them:
There are 52 weeks in a year and though you might not take them all in the first couple of years (because you'll be so busy), you should allow for at least 20 days off as holiday. So, that means 48 5 day working weeks in a year, and 48x5=240 working days per financial year.
Now divide your costs calculated before by the number of working days there are. Say for example the figure is £5000. 5000/240 = £20.83.
That means bear in mind when estimating carpentry jobs every day you need to earn around £21 just to cover the costs of running your business. After that, the rest is your wage before tax.
Lots of the costs added up earlier are tax deductible, which means you wont have to pay tax on the money you earn to pay for the day to day running of the business. So, if you think you are worth £120 a day, you need to earn £141 in order to cover costs and pay yourself that. Any money you can earn on top of that is profit.
You can divide that figure by 8 to arrive at the hourly rate you should charge for small works/extras.
One of the ways you earn extra money is by buying materials at a discount because you have a trade account but not passing all that discount (or any) on to the customer. Most of my suppliers only sell to the trade so the customer should never be able to find out how much the materials cost.
Once you know how much you want to earn on a daily and weekly basis you can add that to the other costs associated with a job like materials and sundries. I use the Construction Master Pro Advanced Construction Math Calculator.
The calculator is a must for anyone who needs to accurately price up material quantities and jobs especially if you don't like maths! It massively speeds up the time taken and accuracy of pricing work which to be honest isn't the most fun job. You can use it also to calculate rafter lengths, stair components (run, rise, length, pitch etc.), sheet material s, studs, diminishing stud lengths and loads more. It basically pays for itself in about a week!
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Use the comments section below if you have any other tips on estimating carpentry work?