From Tradesman To Businessman

I learned this lesson through the unglamorous side of trade work: a job that looked profitable until the unpaid measuring visit, extra collection run and return trip took their share. The workmanship was not the problem. The price had failed to include the real working time. That experience shaped the method used here. It works because it starts with facts from your own business, not a borrowed day rate.

The route is straightforward. First, calculate your true working cost. Next, price the time the job actually consumes. Then add materials, overhead and a proper profit margin. Finally, compare the result with the value and risk of the work, present it clearly and review what happened. Use a calculator, your bank statements and a notebook or spreadsheet. Do not wait for perfect accounts.

The Cost-Time-Value Pricing Loop

The Cost-Time-Value Pricing Loop has three connected checks. Cost tells you what the business must recover. Time shows how many hours the job will consume, including work customers do not see. Value tests whether the price reflects the responsibility, difficulty and result you provide. You repeat the loop whenever a job, customer or set of costs changes.

Start with these steps:

1. Find your required hourly cost. Add the money the business needs each month, then divide it by realistic chargeable hours. Chargeable hours mean time spent on paid work, not every hour you are awake or available. If the business needs £4,800 each month and you can sell 120 hours, your required rate starts at £40 per hour. This figure covers the business before profit.

2. Count the whole job time. Include the first call, survey, measuring, quoting, travel, loading, purchasing, installation, cleaning, invoicing and likely return visits. A four-hour installation may consume six hours once you include collection and paperwork. Price six hours, not four.

3. Add materials and job-specific costs. List materials at the price you pay, including delivery, wastage and small items that disappear from the van. Add parking, waste disposal, subcontractors and equipment hire where they apply. Do not hide these costs inside a vague allowance.

4. Add overhead and profit. Overhead means the regular cost of keeping the business running, such as insurance, vehicle finance, phone bills, accounting, tool replacement and software. Your required hourly cost may cover overhead, but it does not reward you for taking the risk of running the business. Add a clear profit amount before you quote.

5. Check value and risk. A complex fault, urgent call-out, awkward access or work carrying a higher liability deserves a stronger price than a simple, planned task. Value does not mean charging whatever you think you can get away with. It means charging properly for the result, responsibility and inconvenience you handle.

Use a simple pricing sheet with these columns:

| Item | Calculation | Example | |---|---:|---:| | Chargeable labour | 6 hours × £40 | £240 | | Materials | Supplier prices plus delivery | £185 | | Waste and parking | Job-specific costs | £25 | | Profit allowance | Set amount for this job | £90 | | Quote before tax | Total | £540 |

Check whether you need to register for Value Added Tax (VAT), and follow current HM Revenue and Customs rules for your business. Keep VAT separate from your own price so you do not mistake collected tax for income.

The most important number in the loop is chargeable hours. If you work 40 hours but spend 12 hours quoting, travelling, buying materials and handling administration, you cannot divide monthly costs by 160 and call that your rate. The business cannot sell all 160 hours. Record your actual week for one month. That record will give you a better rate than guesswork.

A Bathroom Repair Priced from the Ground Up

Take a small bathroom repair involving a leaking toilet, a replacement valve and damaged flooring. The customer expects a quick fix. The operator expects one visit. The Cost-Time-Value Pricing Loop exposes the real job before the quote goes out.

1. Set the monthly requirement. The business needs £4,800 each month for drawings, van, insurance, phone, accounting, tools, premises and other running costs. The operator expects 120 chargeable hours, so the required hourly cost is £40.

2. Record the complete time. The initial phone call takes 15 minutes. Measuring and diagnosing takes 45 minutes. Travel and loading take one hour. The repair takes three hours. Purchasing the correct valve takes 45 minutes. Cleaning, invoicing and payment administration take 30 minutes. Total time equals 6.25 hours.

3. Price the time. Multiply 6.25 hours by £40. The labour and business-cost recovery figure comes to £250.

4. List direct costs. The valve costs £38, flooring materials cost £72, adhesive and fittings cost £24, parking costs £8 and waste disposal costs £15. Direct costs total £157.

5. Add profit and risk. Add £85 for profit and for accepting responsibility for the completed repair. The quote becomes £492 before VAT, if VAT applies. Round it to a clear £495 rather than presenting a pile of small charges.

6. Write the scope. State what the price includes: diagnosis, removal of the failed valve, replacement, flooring repair, testing, clean-up and disposal. State what it excludes: hidden water damage, defective pipework behind the wall and additional work approved later.

7. Review the result. If the customer accepts, record the actual hours and costs. If the job takes 8.25 hours because the isolation valve fails, note the difference. The next similar quote should include that risk or a stated allowance.

The expected outcome is not simply a higher invoice. It is a price that pays for the complete job and gives you information for the next one. If a customer declines £495 but another accepts £560 for the same standard of work, your old £300 price was not proof that the job was worth £300. It was proof that you had been carrying the shortfall.

Quick checklist

• Record every hour connected to the job. - Check supplier prices before sending the quote. - Add travel, parking, waste and delivery. - Include a profit amount, not only cost recovery. - Write inclusions and exclusions in plain English. - Confirm whether VAT applies to your business. - Record the actual result after completion. - Update your pricing sheet when costs change.

Fix the Pricing Habits That Keep You Short

Using a day rate without checking chargeable time

A day rate hides the difference between eight hours on site and a day containing travel, supply runs and paperwork. If your £320 day rate produces only five paid installation hours after the rest of the work, you may earn far less than expected.

Do this: Record the full working time for ten recent jobs and calculate the average chargeable hours.

Not this: Divide your target income by every hour available in the week.

Copying a competitor’s price

You do not know whether the other firm has lower overhead, unpaid labour, different insurance, cheaper suppliers or a serious cash problem. Matching its price can copy its mistake.

Do this: Build your own minimum price from your costs and time, then explain the work your quote includes.

Not this: Reduce your quote automatically because another operator appears cheaper.

Forgetting small costs and return visits

Sealant, fixings, fuel, card charges and disposal fees seem minor on one job. Across a month, they can remove the profit you thought you had made. A return visit caused by a missing part also consumes time.

Do this: Keep a “job extras” line on your pricing sheet and review it every Friday. Add a clear allowance where the site condition remains unknown.

Not this: Treat every extra as part of your profit.

Raising prices without explaining the scope

A sudden higher figure can unsettle loyal customers, especially when the quote looks like the same old job. Customers respond better when they can see the work, protection and service included.

Do this: State the price, scope, expected timing and any assumption that affects the figure. If supplier or insurance costs have changed, explain that plainly.

Not this: Apologise for a price that covers the work properly.

Your first action is simple: choose five completed jobs, reconstruct their full time and costs, and run each one through the Cost-Time-Value Pricing Loop. You will see which jobs paid well, which ones only kept you busy and which costs your old prices ignored. That evidence gives you a firm base for every later business decision: when to take on help, how to manage risk and how to keep cash moving while the work grows.

End of chapter one. 7 more chapters in the full book.