How to price a job so you actually make money

June 15, 2026 · 8 min read

Most contractors price by feel and wonder why a busy year ends with no profit. Here is the arithmetic behind a quote that covers your costs, your overhead, and your time — plus the pricing mistakes that quietly cost you thousands.

There is a particular kind of exhaustion that comes from being fully booked and still broke. The work is there, the phone rings, the van is on the road six days a week — and at the end of the year the numbers say you barely cleared what you would have made on someone else's payroll. Almost always, the problem is not the volume of work. It is the price on the quote.

Pricing by feel is the default in most trades and service businesses. You look at a job, you remember roughly what you charged for something similar, you add a bit because materials went up, and you send it. That method works right up until it doesn't, and by the time it stops working you have a year of underpriced jobs behind you and no easy way to raise prices on existing clients.

The fix is not complicated. It is arithmetic you can do once and reuse forever. Here is how to build a price from the ground up.

Start with your true hourly cost

The single most common pricing error is confusing what you want to earn per hour with what an hour actually costs your business. They are very different numbers, and the gap between them is where profit disappears.

Say you want to take home 60,000 a year. It is tempting to divide that by 2,080 working hours and land on roughly 29 an hour. That number is fiction. You do not bill 2,080 hours. You bill the hours you are on a job, and everything else — quoting, invoicing, driving, buying materials, chasing payment, sitting on hold with a supplier — is unbilled.

For most solo operators and small crews, billable hours land somewhere between 55% and 70% of total working hours. If you are at 60%, your 2,080 hours become about 1,250 billable hours. Now that same 60,000 needs an hourly rate closer to 48 before you have covered a single other cost.

Then add the costs of simply existing

On top of your own pay sits everything the business consumes whether or not you work today: vehicle payments and fuel, insurance, tools and replacements, phone, software, accounting fees, licensing, workspace, marketing. Add these up for a full year — do not estimate, look at last year's bank statements — and divide by the same billable hours figure.

If your annual overhead is 18,000 and you bill 1,250 hours, that is another 14.40 on every billable hour. Your true cost per hour is now roughly 62. Anything you charge below that is not a thin margin. It is a loss you are financing personally.

• Total working hours per year (be honest about holidays and sick days).
• Realistic billable percentage — track it for one month if you do not know.
• Your target take-home pay, before tax.
• Total annual overhead, taken from actual statements rather than memory.

Those four numbers give you a floor. Every quote you send from now on sits above it or it should not be sent.

Never quote materials at cost

Passing materials through at exactly what you paid feels honest. It is actually a subsidy you are paying your client for the privilege of doing their paperwork. You sourced the materials, you drove to the supplier, you carried the risk of breakage and short delivery, and you fronted the cash until the invoice cleared. That service has a value.

A materials markup of 15% to 25% is standard across most trades and is not something you need to apologise for. On a job with 2,000 of materials, a 20% markup is 400 — often the difference between a job that was worth doing and one that merely kept you busy.

The important part is consistency. Pick a markup, apply it to every job, and build it into your quote as part of the line item price rather than as a separate visible fee. Clients compare totals, not the arithmetic behind them.

Estimate labour in ranges, then quote a single number

Nobody knows exactly how long a job will take. What experienced estimators do is think in ranges — best case, likely case, worst case — and then quote off the likely case with a small buffer, rather than quoting the best case and hoping.

If a bathroom refit is four days if everything goes well, five days realistically, and seven if the substrate is rotten, you quote five and a half. You will be right often enough that the good jobs pay for the bad ones. Quote four and every surprise comes directly out of your own pocket.

For jobs where the unknowns are genuinely large — anything behind a wall, under a floor, or attached to work someone else did badly — say so explicitly on the quote. A line that reads Price assumes existing joists are sound; remedial work quoted separately if required protects you and reads as competence rather than hedging.

Margin and markup are not the same thing

This trips up more small businesses than any other piece of pricing arithmetic, and getting it backwards costs real money.

Markup is measured from your cost

If a job costs you 1,000 and you add 25%, you charge 1,250. That is a 25% markup.

Margin is measured from your price

On that same job, your profit of 250 against a price of 1,250 is a 20% margin, not 25%. To actually achieve a 25% margin you would need to charge about 1,333 — a 33% markup.

If you have been aiming for a 30% margin by adding 30% to your costs, you have been running at roughly 23% for however long you have been in business. On 200,000 of annual revenue that gap is over 14,000. Decide which number you are targeting, do the conversion once, and write it on the wall.

Give the client options, not a single take-it-or-leave-it price

A quote with one number invites one question: can you do it cheaper? A quote with three options changes the question to which one suits me best. This is the single easiest change most service businesses can make to their quoting, and it costs nothing.

The structure that works is a good, better, best ladder. The lowest tier is the job as asked, done properly, with no extras. The middle tier — the one most people choose — adds the upgrade you would recommend anyway. The top tier is the full version with premium materials or an extended warranty.

You will win more middle-tier jobs than you used to win single-price jobs, and the occasional top-tier acceptance is pure upside. Just as importantly, the client feels they chose rather than submitted.

Know when to walk away

Not every job should be won. A price that sits below your true hourly cost does not become profitable through volume — it becomes a faster route to burnout. If a client's budget is genuinely 40% below your floor, the honest answer is that you are not the right fit, delivered politely and without discounting to fill the calendar.

The jobs you decline make room for the ones you should be taking. Contractors who protect their floor almost always end the year with fewer jobs and more money than the ones who take everything.

Revisit the numbers every quarter

Material prices move, insurance renews higher, fuel does what fuel does. A rate you set eighteen months ago is almost certainly out of date. Put a recurring reminder in the calendar for the first week of each quarter, spend twenty minutes checking your overhead and billable percentage against reality, and adjust.

Small, regular adjustments are invisible to clients. The 15% correction you are forced into after three years of not looking is the one that costs you relationships.

Make the quote itself do some of the work

Once the arithmetic is right, presentation carries more weight than most people expect. A quote that arrives the same day, itemised clearly, with your logo on it and a valid-until date, competes on something other than price. It signals that the job will be run the same way.

This is where Inqo fits. Build the quote on site with your rates and markups already saved, send a branded PDF before you have left the driveway, and convert it to an invoice in one tap the moment the client accepts — with every line item, tax, and discount carried across exactly as quoted. The arithmetic is your job. The paperwork does not have to be.