The Art of Estimating

One of the hardest parts about being a business owner,
contractor, or self employed, is estimating the costs
associated with producing goods or services. If you’re dealing
with an item that has a set cost, and you know all your
overhead costs associated with manufacturing your product,
you just need to determine what you want your profit
margin to be.

Sounds simple enough. But what if you are just starting you
business. You don’t have a clue how long it will take to make
your product, or how much to charge. If you price it to low,
you will lose money, to high, you won’t sell anything. Either
way, you won’t be in business long.

Unless you have actually worked in the production of your
product, or have a vast knowledge of your industry, there is
no way a person is going to be able to estimate the costs,
without some idea of the time that is involved.
The time it takes one person to do a task, will be different
from others. Your material costs normally stay static, but
labor costs vary.
One of the tricks I used when I first started out, was to call
on my competitors’ and ask for a quote on a sign, that I
hold no idea how to price. It was for a concrete monument
sign, I knew I could make the foam letters for the form, but
I had no idea the time it would take to fabricate the form.
Well after the first couple of signs, I was able to dial in my
costs, and have produced a ton of signs since.

If your struggling with estimating, you may want to
consider getting a quote from a competitor or two, until you
get the hang of it. You can call anomalously, asking for a quote,
or you can just tell them, you are new to the industry and are
looking for help. This is also a good way to network, if your
competitor is not intimidated by new people to your industry,
or not friendly towards others trying to start up in there
particular industry.

With all the information on the internet, there are tons
of sites with a load of information. You really need to use these
tools more. There are people willing to share their information
at no cost, you just have to really dig for it.. Or you may have tornpay for information that relevant to your industry.
You can and should invest in some estimating software.
It will take time. But the rewards will be great.