Are you puzzled by how to bid a plumbing job or why it’s even important? This article removes the mystery and gives you a step-by-step process for bidding plumbing projects.
You’ll learn the benefits of bidding on jobs and how to break estimates down into an easy checklist. And you’ll get expert tips you can use today when you start writing your first plumbing bid.
The Importance of Plumbing Bids
As a plumber, you probably get customer referrals from friends and family. And you probably get some repeat business from past clients.
But bidding on new jobs is the key to keeping your business stable financially. That’s crucial for all plumbing companies, but especially new ones. Did you know that 20% of small businesses fail in their first year?
Bidding—whether against a couple of competitors or a large field—brings in more income. And it can open the door to bigger and better projects that lead to higher revenue and growth opportunities.
If a project you landed via bidding goes well, you may win future jobs with the same client. You might even become their plumber of choice for all work in your area of expertise.
A well-constructed plumbing bid offers one more benefit. It can guide you through the project step by step. You’ll have your budget, materials, and other elements all worked out, so you can focus on executing the job to the best of your ability.
Types of Plumbing Bids
There are lots of different types of plumbing bids. Depending on your business model and the amount of competition in your area, you might submit estimates for just some of these. Or you might work in all these various categories.
Residential vs. Commercial
Some plumbing companies only work with residential customers. Others do commercial plumbing jobs. Within each niche, you’ll find subcategories. For instance, residential plumbing can include:
- Single-family homes
- Apartment buildings
- Small rental properties
Plumbers who work with commercial clients may specialize in:
- Food and hospitality
- Retail outlets
- Office buildings
- Industrial facilities
- Educational institutions
The closer you are to a major city, the more likely it is that you’ll have to drill down your business to a specific niche. This is due to a higher concentration of plumbers, which makes for more competition.
But if you work in a more remote rural area, you probably do a broader range of jobs. There are likely fewer plumbers to compete with, so you can win a bigger share of the business.
New Construction
New construction projects are a great chance to land samples for your portfolio. Because everything is pristine, the photos will look nice, and you’ll probably have to worry less about getting the owner’s permission.
Rather than working with homeowners directly, you’ll be submitting bids to a real estate developer or architect. These jobs tend to be more competitive. But if you can land one and do a good job, a developer could give you future work.
Remodeling and Renovation
Renovation projects typically entail modernizing outdated plumbing. But they also have to maintain the integrity of the property. They often involve older buildings or historic homes that are subject to laws and regulations about changes. So you have to be creative and able to work with limitations on these projects.
Remodeling projects tend to be larger and involve changes to a property’s structure. Walls can be knocked down to accommodate a modern kitchen. Or an addition might boost square footage while adding a powder room.
Plumbing Service
Bids for plumbing service frequently mean winning ongoing business. For instance, you could become the on-call plumber for a property management company.
Certain industries need regular plumbing service more often than others. Examples include restaurants, commercial kitchens, hotels, and schools. This work is ideal to keep steady income rolling in.
Bidding a Plumbing Job in 10 Steps
Plumbing bidding is much easier if you break it into smaller steps. Think of the steps below like a checklist. Make sure you hit everything on the list before submitting your bid.
1. Find the Right Jobs to Bid On
Above, we discussed knowing your niche as a plumber. Once you hone that, how do you find plumbing jobs to bid on?
The best way is to make connections with people who hire plumbers, like:
- Architects
- General contractors
- Developers
- Real estate agents
- Property managers
- Landlords
- Business owners
And of course, if you’re in residential plumbing, you need to connect with homeowners. You can do this through social media, especially your town’s community or group pages.
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Other options include:
- Joining organizations like the Chamber of Commerce
- Buying advertisements online or in print newspapers
- Offering free mini workshops on common plumbing issues
- Subscribing to government publications with RFPs
An RFP is a request for proposal, also sometimes an RFQ or request for quote. It’s a more formal way of soliciting bids used by cities, counties, states, and the federal government.
2. Collect Information About the Project
Using an RFP or RFQ is ideal because these documents tend to be quite thorough. They give you a ton of vital information about the project (like in this example) and who qualifies to apply.
If you don’t have a document like this, you’ll have to gather this information on your own from things like:
- General contractor proposals
- Blueprints and plans
- Visits to the jobsite (if possible)
The goal is to get as much knowledge about the project as you can. And you’ll want to know if the job requires any special skills or experience.
Some plumbing projects also insist that the plumber provide a certain amount of insurance and/or a bond. A bond is a guarantee that you will finish the job on time and to particular standards as per the contract. You can usually purchase a bond from your local government or an insurance agent.
3. Create a Quantity Takeoff
This is where the budget for your project begins. A quantity takeoff is a list of all the supplies you will need for the job. Examples include:
- Pipes
- Fittings
- Valves
- Supports
- Fixtures
- Insulation
- Sealant
Depending on the plumbing scope of work, you might also need material for outdoor grading, such as gravel or sand, to lay pipes or sewer lines.
It’s important to count every piece you’ll need at this stage. It forms the basis for your quote. And it ensures you’ll have everything you need when you actually start the job.
4. Get Quotes on Materials and Equipment from Suppliers
To build an accurate estimate, you need to know exactly what those materials cost. Contact your supplier to determine:
- The price per item
- Discounts for bulk orders
- Number in stock
- Delivery time for out-of-stock items
Don’t forget to decide if there is any equipment you need for the project that you don’t already own. You may need a concrete grinder, for example, or imaging gear to look inside old pipes.
If you think you could use this equipment on future jobs, it might make sense to purchase it and include it in your overhead costs (see below). Otherwise, you can rent it and have the project absorb the expense.
5. Calculate Your Labor Costs
Next, you need to figure out the cost for you and any employees to work on the project. Remember, this is what you charge the client—usually by the hour, but you might also give a day rate. It’s not necessarily what you pay the worker by the hour, though.
The labor rate you quote your client should include the employee’s hourly wage. And it also includes a fraction of other costs you carry with payroll, namely:
- Benefits and insurance
- Paid time off/vacations
- Paycheck taxes
This is what’s known as a fully loaded labor rate.
For some jobs, you might want to offer a flat rate. Instead of charging by the hour or the day, you charge by the service. This makes everything easier for you, your workers, and the client.
When is it right to quote a flat rate? It’s most appropriate for service contracts where you’re doing predictable work on a repeat basis. Think about jobs like unclogging drains and toilets or installing water boilers.
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6. Add In Your Overhead Expenses and Profit Margin
There are two more items to include in your budget when preparing an estimate. If you only charge materials and labor, you won’t break even on the job. So you need to add in overhead and your profit margin. This lets you actually make money on your projects.
Your overhead expenses are the costs you pay to run your business on a day-to-day basis. They’re separate from expenses associated with any specific projects.
What’s considered overhead?
- Office rent and related expenses
- Vehicles, fuel, and maintenance
- Business taxes (not payroll)
- Marketing and advertising
- Licenses and permits
- Insurance and bonds
- Fees and membership dues
- Bookkeepers or accountants
- Computers and software
How do you add overhead expenses to a plumbing bid?
The most common way is to incorporate it into your labor costs. This involves a bit of math. But once you have the figures, you can plug them into any estimate.
One method is to calculate your total for overhead expenses for a certain period of time (say, a year). Then, divide that by number of days worked over that time period to get a cost per day. Add that figure to what you charge per day for labor. You can also do this by the hour.
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What about your profit margin? This is where you really make money! Everything else is just covering your expenses and the cost of the project.
Your profit margin is an amount added to the total of the costs discussed above. It depends on multiple factors:
- Your skills and level of experience
- Your geographic location
- Demand for plumbers in your market
- Amount of competition in your niche
- What clients are willing to pay
- Ups and downs in the general economy
Another factor is how badly you want the project. You might take less profit to work with a developer who can bring you lots of new construction work in the future. Or you could charge more for a one-off historic renovation that you know will be full of headaches.
Since you’ve already calculated the expenses for your materials, labor, and overhead, the profit margin you add is your net profit margin. It could be as low as 10% or as high as 60%.
There’s quite a range in the industry. You can talk to non-competitor colleagues about their profit margins. And you’ll have to use some trial and error to arrive at a figure.
Be aware that your profit margin can change over time. If the economy takes a tumble, you may have to lower it. But if your reputation grows, you may also be able to raise it eventually. Aim to be that in-demand plumbing business with a waiting list!
7. Use Estimating Software for Precise Estimates
If this all sounds like a giant hassle, there’s a tool that can help you. Contractor software built for plumbers will make preparing estimates and bids a breeze.
The software gives you a customizable estimate tool. You plug in the numbers, and the software does the heavy lifting for you.
Let’s say you decide to increase your profit margin. The program recalculates everything anytime you change one number, which saves hours of time. It also reduces the possibility of human errors, and it makes your business look more professional.
8. Prepare and Review Your Proposal
Once you’ve got your numbers and have used your software platform to flesh out the estimate, preparing the rest of the proposal is easy. Give it a good review with fresh eyes, and ideally have a partner or colleague check it over for any mistakes.
9. Submit the Bid
Does everything look perfect on the proposal? It’s time to submit it.
Follow instructions in the RFP or given to you by the client. You may have to send it online as well as submit a written copy.
Dates for plumbing bids are nearly always strict. Don’t wait until the last minute, in case there’s a glitch. Shoot for submitting your plumbing quote at least a day or two before the deadline—the earlier the better.
10. Follow Up with the Client as Needed
Some clients are reliable about following up with contractors about bids, especially if it’s a government entity. But you may have to give them a nudge.
A phone call or email if you think the decision-making time has passed is not inappropriate. Simply ask if they got all the information they needed from your company or if you could provide anything else. That usually prompts clients to get off the fence about a project.
Best Tips for Bidding Your Plumbing Jobs
Do you have plumbing jobs you could be bidding on right now? Here are a few final tips to help you win more projects:
- Don’t waste time bidding on pie-in-the-sky projects that are well beyond your experience level. Stay in your area of expertise and gradually move up to more challenging jobs when you have more projects under your belt.
- Try to avoid selling your services with low-ball bids. You’ll get frustrated with how little profit you make. And you can develop a reputation for being a “cheap” plumber. Instead, sell on your specialty skills and reliability.
- With all but the most basic jobs, build in a time buffer. If you think the job will take 11 days, consider submitting a bid for 12 or 13. That way, you have extra time in case you hit a snag. And you’ll always finish under the wire, which clients like.
- If you lose a bid, ask the client why they chose another company. Tell them you want to learn so you can adjust bids in the future.
- Always be working toward legitimate ways to increase your profit margin. Invest in training, continuing education, and new technology. Is there a service no one in your area is offering? What other services could you cross-sell or upsell?
- Remember that writing your first bid is a time investment. But with estimating software, you can use previous bids to create new ones much faster. And you can integrate estimates with other aspects of operation. That includes accounting, invoicing, inventory, and marketing to be more competitive and profitable.
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