Free micro lesson

How do you use a quote checker to find the real cost of a job?

A quote checker takes your raw cost of operations figure and applies it to the actual labour hours on a specific job, adjusted for your efficiency rate. At 100% efficiency an eight-hour single-person job costs you roughly $791 in labour; drop to 80% efficiency and that same job costs closer to $989. Knowing that number before you quote tells you exactly where your profit sits, and how many hours you can afford to overrun before you lose it entirely.

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What does the quote checker actually do?

The quote checker pulls in your cost of operations figure, the number that tells you what your business costs to run per labour hour, and applies it to a specific job you are about to quote or have already done. It does not replace your job management software. It is an optional sanity check you can run on any quote to see whether your pricing covers your real costs.

The core output is simple: given the number of labour hours on this job and your current efficiency rate, here is what that job actually costs you, and here is how much profit you are carrying.

How do you enter the labour hours correctly?

You enter the total number of labour hours across everyone on the job. One person for two days and two people for one day are the same number of hours in the calculator. If you send a qualified tradesperson and an apprentice, count the apprentice at a point five, so that combination produces 12 labour hours rather than 16.

The calculator then uses your cost of operations rate against that total to produce the raw labour cost for the job.

What does the efficiency percentage change?

Your efficiency setting reflects how consistently you fill your billable hours. If you are confident you can keep your team fully charged out, use 100%. If you realistically run at about four days a week of consistent work, use 80%.

At 100% efficiency, an eight-hour single-person job costs you roughly $791 in labour. At 80% efficiency, that same eight hours costs you closer to $989 because you are spreading your fixed costs across fewer actual billable hours. The difference between those two numbers is the difference between a profitable job and one that merely covers costs.

How do materials and margin fit into the checker?

If you charge for materials separately, you enter the material cost and choose a profit margin percentage you want to apply to it. The calculator then produces a total quoted figure that covers both your labour cost and your material cost with the margins you have chosen.

Any field shown in blue can be changed. The grey figure at the bottom shows you the total you would need to charge the client to hit the margins you have set across labour and materials combined.

How do you use it to find where a job turns unprofitable?

Once you have entered the estimated hours and your efficiency rate, you can change the hours to model overruns. If you have quoted eight hours but the job is an unknown, type in 10, 12, or 13 hours and watch the profit figure move.

The point where profit reaches zero is the number of hours at which the job stops paying you. Knowing that number before you start means you can decide whether to allow more time in your quote, tighten your scope, or at least know exactly how much buffer you are carrying.

What happens if you finish faster than estimated?

If you finish the job in fewer hours than you quoted, the profit on that job increases. If you complete it early enough to put your team onto another chargeable job for the remaining hours in the day, you can achieve greater than 100% efficiency on that day overall.

The checker lets you model both directions, the overrun that wipes your profit and the early finish that creates it, so you can see where the real risk and the real opportunity sit on any given job.

Can you use the checker for square-metre or panel-based pricing?

Yes. If you price by the square metre or by the number of panels rather than by the hour, there is a section in the checker for that. You enter the quantity and your rate, and it calculates the revenue from that pricing structure. You then enter your estimated labour hours alongside it so the checker can compare what you are charging against what the job will actually cost you in labour.

Also asked

Questions this lesson answers.

What is the raw cost of operations figure the quote checker uses?

It is the amount your business costs to run per labour hour, based on your current team and your fixed weekly costs. In the example in the lesson that figure is $98.95 per labour hour for one person. The quote checker pulls this number in automatically and applies it to whatever job you are costing.

What efficiency percentage should I use in the quote checker?

Use 100% if you are confident you can fill every available billable hour. Use 80% if you consistently work around four days a week of chargeable work. The lower the percentage, the higher your true cost per job, because your fixed overheads are spread across fewer billable hours.

How does adding an apprentice affect the labour hours calculation?

Count an apprentice at 0.5 rather than 1.0. So one fully qualified person plus one apprentice on a single day produces 12 labour hours in the calculator, not 16. That affects the total labour cost the checker shows you for the job.

How do I know at what point I lose all profit on a job?

Enter different hour totals into the checker and watch the profit figure. Every extra hour costs you your hourly cost of operations rate. The hour count at which profit reaches zero is your break-even point. If you think the job could realistically reach that number of hours, you need to either price higher or tighten your scope.

Can the quote checker handle jobs priced per square metre?

Yes. There is a section where you enter the quantity and your per-square-metre rate. The checker calculates the revenue from that structure and then compares it to your labour cost based on the hours you estimate, so you can see whether your square-metre rate actually covers your real costs.

One mistake makes a full day job completely unprofitable
From Cost of Operations - Using the Quote Checker
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Cost of Operations - Using the Quote Checker

  • Calculate your labour hours at 80 per cent efficiency, not 100 per cent, to see your true job cost.
  • Applying your efficiency percentage to labour hours shows the real cost: at 80 per cent efficiency that eight-hour job costs you nearly a thousand dollars, not eight hundred.
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