Pricing Out your Subcontract Work

In order to be competitive when bidding on a subcontract, pricing is a major factor that will come into play. Nevertheless, be sure not to sell yourself short and make sure you have all the essential subcontract pricing considerations under your belt. Here are some requirements, costs and other subcontract pricing factors you should take into account before you sign a contract.

Things to Consider for your Subcontract Pricing Strategy

Subcontract Pricing History – Find out what your competitors are charging for similar services. You can contact a Procurement Technical Assistance Center to ask them if they have any history of what subcontractors were paid for projects that required your services. It would also help to obtain a few past contracts to verify the statements of work to see what was required of the subcontractor. This will help you make a fair evaluation of the subcontract pricing structure.

All Special Requirements – Extra requirements, such as special deliveries, can add up. If you’re simply adding on a percentage of your overall subcontract price, beware that you’ll need to factor in gas, mileage and the delivery person’s fee to accurately estimate delivery costs.

Quality Requirements – If certifications or acknowledgements are required, will there be an added cost to your subcontracting company? See what additional fees may be involved with getting the needed certifications or acknowledgements and how that will affect the ending subcontract price.

Overhead and Profit – Although the bidding process can be very competitive, just remember that you must make a profit. Bidding on a contract just to win it doesn’t make good business sense if you won’t profit in some way. Also, factor in any overhead costs so you don’t price things out incorrectly.

Until you know your true subcontracting costs, you can’t be sure if you’re actually making money in certain areas or not. Remember that even if you see an increase in sales, it doesn’t mean that you have an increase in profit. If your cost information isn’t on the dot, your subcontract pricing can’t be correct or competitive.