Know the number you will not go below before the conversation starts

The number tends to get decided in the room

Most small-business prices are agreed in a live conversation, under mild social pressure, by somebody who wants the work and does not want to seem difficult. That is an unpromising set of conditions for arithmetic, and it explains why the figure people end up accepting is so often lower than the one they intended.

A floor decided beforehand changes the nature of the exchange. You are no longer working out what to charge while somebody watches; you are checking an offer against a number that already exists. That is a much easier thing to do calmly, and it takes the whole question of nerve out of it.

Build it from three things

The first component is the direct cost of doing this particular job: materials, anything bought in, travel, and any third party you would have to pay.

The second is your share of the cost of existing. Every week the business runs it consumes money whether or not anybody is buying, and each job has to carry a portion of that. Dividing your annual running costs by the number of jobs a year realistically contains gives a crude figure that is far better than the usual practice of ignoring it entirely.

The third is what your time has to earn for the business to be worth running. Not what you would like, and not a wage; the amount below which you would be better off doing something else. Together these three produce a number under which the job actively costs you money, and knowing it isn’t the same as expecting to charge it.

The week has an alternative use

A floor built only from costs misses the largest item. If taking this job means turning down another, the real cost includes what the other one would have paid, and in a busy period that is a much bigger number than the materials.

This is why the same job can sensibly be quoted at different levels at different times of year. It is not opportunism; it is that the resource being sold is genuinely scarcer in some weeks than in others. A quiet diary lowers the floor legitimately, because the alternative use of the time is nothing, and there is no shame in taking work at a level you would refuse in a busy month.

A floor is not a target

The most common misuse is treating the floor as the price. It is not; it’s the point at which the answer becomes no. The price should be built from what the work is worth to the buyer and what your position in the market supports, and it should normally sit well above the floor.

Keeping the two figures distinct matters, because a business that habitually quotes near its floor has no capacity to absorb a job that goes wrong, and jobs go wrong. The gap between the floor and the price is what pays for the ones that overrun.

Decide it before, and write it down

The floor should exist as a written number before any conversation, ideally noted next to the job. The act of writing it makes it considerably harder to slide past it under pressure, and it gives you something to look at when a client makes an offer and pauses.

It also lets you respond immediately rather than promising to think about it, which is worth something in itself. And if you do move below it, you will at least know that you did, which is the difference between a decision and a drift.

Walking away is an outcome, not a failure

Work taken below the floor does more damage than an empty week. It occupies time that cannot then be sold to anybody else, it sets a price the client will expect again, and it generates the peculiar exhaustion of being fully booked and no better off.

Declining is also information for the buyer. Some proportion of clients who hear a firm no come back with a larger budget, because the number they offered was a starting position rather than a limit. Not all of them, and that is fine. A business that never loses a job on price is charging too little, and the only way to find the boundary is to occasionally be on the wrong side of it.