Too many shops quote low to win work, then wonder where the money went. Price off your true costs, hold an honest hourly rate, charge for the small stuff, and review every job. Staying busy is not the same as staying profitable.
Too many fabricators fall into the same trap: quoting low just to win the job, then wondering why there is nothing left at the end of the month. It is a race to the bottom, and it does not hold up.
Here is a simple, no-nonsense way to price jobs properly, so you are not just staying busy, but staying profitable.
01 Start with your true costs, not just materials
If you are only charging for steel, consumables, and a few hours on the tools, you are leaving money on the table. Factor in the things that never make it onto the quote:
- →Overheads: rent, power, insurance, and the rest of the bills that arrive whether the machines run or not
- →Setup time and machine changeovers between jobs
- →Idle time and the risk of rework
- →Admin: quoting, chasing suppliers, and invoicing
Add a buffer for the hours your machines are not running because you are still paying the bills. That buffer is the difference between a rate that looks fine and one that actually holds up.
02 Know your hourly rate, and stick to it
Work backwards from the profit you want. If you want to earn more than wages, your hourly rate has to reflect that. Here is the rough shape of it:
Say your total monthly costs are $20,000 and you want $10,000 profit. Divide that $30,000 by the hours you can actually bill, not just the hours you work, maybe 130 a month. That is a rate of about $230/hr.
The number that catches people out is billable hours. You do not bill for quoting, cleaning up, or waiting on steel, so your billable hours are always fewer than the hours you are at the shop. Price on the honest number.
03 Do not underestimate the small stuff
Individually, these barely seem worth a line on the quote. Add them up over a month and they are the difference between a good month and a flat one.
Six grand a month is a wage. If it is not on the quote, you are paying it for the customer.
Anyone can be cheap. Not everyone can deliver quality, on time, without excuses. That is what you charge for.
04 Quote with confidence, and justify it
Higher prices are easier to win when the quote does the work for you:
- →Present it clearly and professionally
- →Show exactly what is included, with no grey areas
- →Do not apologise for the price. Explain the value behind it
05 Review each job after it is done
The best shops treat every job like a feedback loop. A quick review at the end of the week is enough. Ask:
- →Did we make the margin we expected?
- →Where did the time or the cost blow out?
- →What would we quote differently next time?
You did not start your business to scrape by. Price with purpose. Build with pride. And make sure the numbers work, not just the welds.
Someone has to be the most expensive shop in town. Ask yourself: why shouldn’t it be yours?
Paul writes Steel & Sense for owners who would rather run a sharper shop than a bigger one. Factory is the software he always wished he had on the floor.