In doing carpentry estimate there are other variables to include besides material and labor. There are the General overhead expenses and the variable expenses and I will explain to you in detail exactly what they are.
General Overhead expenses are costs involved in running you business as a hole are not associated with just one job. Rent, insurance, office equipment, and vehicles are good examples. Variable expenses apply to just one job. The materials that you use are part of the cost of doing a job, even if you have them in your inventory and do not purchase them especially for a particular job.
Variable expenses may also include labor of employees, special insurance, waste removal, fees for permits, and numerous other items. If you are not sure ask yourself “Would I buy this if I weren’t doing this job.” If the answer is no then this is probably a variable expense. You could make a list showing each expense item and the cost.
The carpenter that does not take in account the expenses of running his entire basic carpentry business when pricing his work is cheating himself just as much as one who does not take material costs into account. Someone asked me a question the other day “why is the hourly rate the best way for pricing jobs.”
There is a bunch of reasons why and here they are;
· You make the most money
· It helps you avoid unprofitable jobs.
· It makes sure that all of your expenses are fairly past on to your customer
· It helps to determine your annual income
· It makes clear the financial impact of working different amounts of time
· It helps you distinguish expenses that are part of the general overhead and expenses that are part of the partial job
· You pricing is clear fair and reasonable and you can defend your prices to anyone
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