How to price a plumbing job

Because plumbing is one of the most essential building systems, demand for plumbers and excellent plumbing work continues to skyrocket. There are currently more than 480,000 licensed plumbers in the U.S. — a number that is expected to increase by nearly 16% over the next three years to meet current shortages.

Given both escalating demand and intense competition, plumbing companies are looking for every possible advantage to capture a larger market share. While some businesses are focusing almost exclusively on touting their eco-friendly plumbing fixtures or incorporating plumbing into smart-home features, you can immediately make your plumbing company stand out from the rest of the field by creating compelling bids and accurate estimates for your jobs.

Before getting to the factors that can impact your bids, it is important for plumbing companies to recognize that they may encounter three very different kinds of bids.

Remodeling plumbing bids

Remodeling plumbing bids may be for commercial or residential clients who want to remodel either an entire building or a specific room containing a great deal of plumbing, such as the kitchen, bathroom, or laundry room. Before making a remodel plumbing bid, it is essential to ask for a pre-bid meeting and a site walkthrough to examine the building or room and understand the client's needs. This ensures a better understanding of the materials and labor you will need for the project.

Construction plumbing bids

Construction plumbing bids typically are used for commercial clients and residential builders. These bids need the highest consideration during bidding since new plumbing equipment has to be planned out and installed and, ultimately, the company selected will be responsible for ensuring that the new building contains a robust plumbing system with clean running water.

Plumbing service bids

Plumbing service bids are routinely used by government agencies or property managers to award a plumbing contract. The winner of a plumbing service bid becomes the responsible party for all of the client’s plumbing needs until the end of the contract.

While some plumbing jobs have a fixed rate, most plumbers charge hourly rates for their work. Regardless of whether fixed or hourly billing is being used, though, the actual cost of plumbing will vary depending on the project's sum of labor, material and overhead costs. The hourly rate determines the labor and material costs by the contractor's markup, and the overhead costs include extra charges put on the labor and material costs.

With that in mind, plumbing companies need to take into account a number of critical factors that will affect the plumbing estimates. The condition of the site for the plumbing job, for example, will heavily dictate the cost of the work. As a result, the estimate should be based on the state of the job site and how much time, effort, equipment and materials will be needed to complete the required work.

In terms of time and effort, plumbing companies should start with the way in which they treat each potential job. The policy of some plumbers, for example, is to offer free estimates for all work they have been asked to bid on. Others, however, charge a service or trip fee for a site visit. Either option is acceptable in the industry, but it is important for the company to make the prospective client aware of how it treats its estimates before taking the time to visit the site and discuss the client’s expectations.

Another important factor when considering time and effort is the ability to approximate the number of billable hours it will take to complete the project. Whatever the actual hours estimated, plumbing companies typically should consider adding 20-30% of the estimated time in order to account for distractions, breaks and unforeseen issues that inevitably will arise during the project.

They also need to take into account the price per head for any additional staff that may be required for larger jobs. Again, it is important to add a percentage to that personnel cost in order to provide a hedge against unforeseen circumstances that could occur once the job gets underway.

With regard to equipment and materials, bids should include an itemized cost for all fixtures to be used on the job and any related materials that will directly impact the final cost. If additional equipment beyond standard tools needs to be used, that cost should be included, along with the costs for any permits and supporting work (such as debris removal and concrete or carpentry work). Where possible, it is also advisable to offer the prospective client various options at various price points in order to expand their options and create a more flexible estimate.

While such considerations help to create an accurate cost estimate, plumbing companies should also consider several best practices and principles whenever bidding a job.

First and foremost, it is critical to understand the prospective customer's expectations. Putting a bid together and providing the customer with an accurate estimate takes a lot of work, and, in most cases, the plumbing company is doing this work for free without any guarantee that it will win the bid or receive goodwill compensation. As a result, making certain that you fully understand the client's expectations will provide the best chances for success.

Obviously, these expectations will vary across clients and depend on the bid size. If the bid is for a large government contract, for example, the prospect will expect an extremely detailed proposal, particularly when compared to a homeowner requiring a small plumbing project that can likely be satisfied with a simple verbal estimate.

It is equally important to price materials precisely. Because materials are one of the highest costs in any plumbing estimate, companies need to be accurate in their pricing and ensure that the client is being given the best prices possible. Doing so will serve to lower the overall project cost and improve the chances of securing the bid.

Consideration of the needs and likely preferences of a client also factor into bid. One client, for example, might express a willingness to spend on top-end materials and fixtures offering all of the bells and whistles, while another may be more conservative and budget-oriented. Bids can still offer options while specifying the differences in cost and quality between top-of-the-line and industry-grade materials.

Finally, a bid should make the case for giving your company the business. Plumbing companies need to remember that not all prospective clients will take their bids as originally presented. They may have to defend and justify labor costs, material and fixture costs, and overhead costs on the estimate. And because the client is likely to be receiving bids from competing firms, it is important to make your bid stand out by demonstrating that you care about the customer's needs and are eager to earn their trust. You can do this by ensuring your proposal is thorough and professional. Bottom line, attention to detail at every level of your bid sends a message that your work will also display the same kind of professionalism and attention to detail.