3 factors to perfect your costing model

by Ofentse Sefolo
3 factors to perfect your costing model

Factors that have traditionally played a minor role in our costings now play a more significant role in whether professionals in the built environment make a profit or not. The issue of costing has led the team at iTe Products to explore whether costing models are showing the true cost of doing a flooring installation, or whether professionals are losing out on potential jobs due to costing models outpricing them against their competitors.

The following factors make a difference to your costing model:
1. Time – Labour is no longer a cheap resource. Every wasted hour is not only time paid for, but also a lost opportunity in respect of generating additional business.
2. Transport – Every trip costs your business in terms of money and lost time.
3. Actual Costs – What are the usage rates of the product, what are the total system costs and how do these affect the ultimate cost?

Many flooring contractors take the most visible cost, namely the price of the commodity, into consideration when doing costing. For illustrative purposes iTe Products examined an example of a flooring preparation system of a competitor for vinyl sheet flooring and compared it with their own. The iTe System total material cost is set at 100%:

Example: iTe Products vs Competitor flooring preparation system for vinyl sheet flooring

The above example shows that the actual total cost between different products can be deceptive if one only takes the bag price for competing products. Other key factors, namely labour costs, time and trips need to be included in the costing calculation to obtain an accurate idea of what the flooring preparation system installation will cost the contractor.

The best proof of actual cost lies in the experience of measuring all the factors repeatedly on different sites over time. Proper costing can mean the difference between making a profit or not, or winning jobs.

For more information and to enquire about the Rand costings, contact iTe Products on Tel: +27 (11) 864 4918 or via www.iteproducts.co.za.

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