Phoenix Specialty Coatings' Price Structure Changing -- Your Opinion is Requested

Leanna,
Obviously, there are several ways to look at how you generate your income. You can do it time and material, cost plus, per piece, etc. What it basically boils down to is what you project as your annual business income requirement (to keep the doors open). Let's face it, you do this as a job, not a hobby, and you need to make a profit - the fun is just a bonus.

If I understand what you said, it sounds to me like you have primarily been taking in a piece and estimating a cost based upon your experience - your time hasn't actually had a value placed on it up until now. You can closely guess (estimate) how much material will be used, but the hourly rate for your labor was not factored in. A valve cover in this color and needing these repairs and preparation will run $$$. A similar valve cover in a different color and needing these additional repairs and preparation will run $$$$$. Like you said, a $165 total bill less the material cost leaves very little per hour for your labor over two days work.

One way to look at it is that your annual income needs to be a certain amount. You can achieve that amount either through the hours you work for it at a particular rate (plus materials consumed), or you can get it through completing a given number of jobs (say an average of six jobs per month at an average cost of $$$). The trick is determining which method seems to work best for your type of business.

When estimating a job, I would suppose the easy part is figuring in the material costs. The biggest variable is probably your time involved in preparing the parts for coating (including repairs if necessary). If you estimate your time using your experience with similar items and apply some hourly rate, I doubt seriously that you are going to charge your customer much more, if any, should you run over on that estimated time (I think I know you well enough to assume that). On the other hand, if you estimate the cost using a reasonable average from other similar items you have previously done, then your hourly rate is irrelevant.

At the risk of seeming to minimize your anguish over this subject, how about developing a "menu" style of pricing? Could you list a base price for various categories of pieces in a standard color, ie. intakes, valve covers, air cleaner lids, cat bells, etc.? Then set prices (not hourly rates) for additional work to be done per piece. Then add for special order colors or multiple layers of coating. Once all the various specifications are set and a final cost is determined, there it is.

In the long run, does it really matter whether your income is based upon the hours you spend each day/week/month, or upon the number of pieces you complete in the same period of time? The bottom line is the total dollars.

Didn't mean to get so long-winded, but I feel your pain. I used to struggle with a similar quandary over hourly rates vs. lump sum prices for freelance CAD drafting services. Some clients wanted hourly rates and some wanted a fixed price for each drawing. Somewhere, you will find what works best for you.