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Estimating books — OEM and industry service providers

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Significantly, there are companies that provide estimating in a more packaged form that gets the final number quickly. The one with which I have a working familiarity is focused specifically on the construction trades.[3]

They have created formulae into which you plug the square feet, height over normal, number of windows and/or doors, and utilise either economy, medium, or high value materials. In a few minutes, out pops a number which is then multiplied against a regional factor to arrive at a selling price. It keeps track of cost differentials through regional surveys which translate to a factoring number that you plug in to give a final price.

Similarly, the auto-body industry gets books from the manufacturers detailing how long it will take for a fender to be straightened or a side panel to be hammered out. From this it is easy to determine what your costs are going to be and to apply a markup factor. Typically, the auto-body people use this information to apply standard rates and then encourage their technicians to improve upon those numbers. If they accomplish in 24 hours what the book says will take 32 hours, the price does not change but the costs do.

If your industry has a guide like this, get your hands on it and use it as a guideline to keep your costs and pricing under control. When price and costs are under control, you can play with them to find higher profits, and teach these methods to business partners and employees. The value in the business increases through having these systems in place.

Pricing Strategies for Small Business

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