I spend tons of time thinking about this topic. Our pricing is essentially done like this.
1. Determine overhead costs- This MUST include everything you pay to run your company, insurances, building lease, equipment lease, accounting, marketing budget, annual fuel budget, utilities, plates, ect. I also add my employees labour, insurance, benefits, taxes ect into this number.
This should give you the total operating cost for your business. (I review this annually or anytime a large recurring payment is added to it.)
2.Now calculate the number of annual man hours (1hour for every guy that works in the shop) worked in a year. Divide your OH by the hours and it will give you what I will refer to as shop rate.
This is the base line for quoting.
3. Now that you have determined the cost to do business. You need to determine what the cost of materials are on the project you are pricing, then you must guess at the number of hours to produce it. Adding all of these costs togeather will give you what I call NET 0. Aka breakeven!
4. This is the point at which you need to determine what the profit margin will be on the project. 30%-70% is my suggestion. We change our margin based on demands/ expectations, supply only, cost of raw materials, risk ect.
Adding this on will give you deliverable cost. SIMPLE. LOL
What I’m currently doing is using online time tracking for each individual employee to see how close our estimated hours on a project are to the actuals. This will provide key data to help us quote better in the future, the program also shows our guys how they are doing vs. the estimated time on a job.
Hope this helps. If so leave a comment below! Thanks.