Originally Posted by
Hillbilly Welder
I'm in the beginning stages of doing the same thing you are. Currently fielding quotes for a surety bond and liability insurance, and procuring equipment. I'll be following this thread as I'm in search of the same information. I have a decent grasp on the business aspect, but the actual quoting of jobs is the piece I'm still trying to nail down.
Jody, from Welding Tips & Tricks, has the most succinct advice I've heard so far regarding quoting jobs. I don't know how well it works in the real world, but it's the best I have to go on right now.
He says to figure $1.00 per inch of weld deposited, plus $1.00 per tack weld, and then add 10%. You would probably be safe by applying this method to a job or two, and making adjustments as necessary.
Speaking from experience, I wouldn't charge by the hour if you can avoid it, and the reason is simple. You're potentially leaving money on the table, and also risking frustrating your client. If it's your first time doing a particular project, it might take you longer to figure it out and get in to a rhythm. If the job takes you 10 hours to complete, then maybe you made $350 if you are charging $35 an hour. Now, the client may feel that's a fair price for the work he got done, or maybe he feels that you were milking it and it took way too long. Now, suppose he's a repeat customer with periodic work that's basically the same. After you've done it for him five times, it no longer takes 10 hours to complete. Now, you can do it in 6. If you charge him the same $35 an hour, you've effectively reduced your hourly wage because you're doing the same work, but in 4 hours less time. Now you only made $210 on that job instead of $350. But you can't really up your prices on your client either to compensate, because he'll probably be upset that you're suddenly raising your rates on something that you've done for him multiple times.
By setting a flat rate, it keeps your customers at bay and it also allows you to dictate your hourly wage. You have MUCH more control over how much money you make. If you charge $1000 for a given job and you knock it out in one long day, then you made $100 an hour and the customer is happy for the work they got done for $1000. On the other hand, if you stand around hemming and hawing at the job all morning, it might take you two days to finish it. In this scenario, you will have reduced your hourly rate to only $50.
The problem with an hourly wage is that you are placing a cap on your earning potential. No matter what you do, there are only a certain number of hours in the day during which you can be productive and effective in your work. So you're always going to make the same amount no matter what you do.
By charging a set rate per job, you're in control. The more experience you get under your belt, the faster you get at everything you're doing. As you start finishing jobs in less time, you can pack more work in to the same number of working hours, thus effectively increasing your pay rate.
Essentially, an hourly wage means you're being paid for your time, while a custom quote per job means your client is paying for the work that's actually getting done. Both tend to end up happier when they bill for, and pay for, the work they want done.