How to price your jobs (without guessing)
Underpricing is the quiet killer of trades businesses. How to set prices that cover your real costs, pay you fairly, and still win good work.
Most contractors price by gut, by matching the last guy, or by whatever feels like it won't scare the customer off. That's how good tradespeople stay broke while busy. Pricing right isn't greed - it's the difference between a business that lasts and one that burns out. This is how to build prices from your real numbers.
Start with your true costs
You can't price a job until you know what it actually costs you to do it. That's more than materials - it's your labor (paid at a real wage, including yours), materials with a markup, and a share of the costs that never stop.
- Direct labor - hours times a real hourly cost (wages + payroll taxes + insurance), including your own time.
- Materials - at cost plus a fair markup (you carry the risk and the run to the supplier).
- Equipment and consumables used on the job.
Add the costs that never stop
Your truck, fuel, phone, software, insurance, licensing, and the hours you spend quoting and doing paperwork - these exist whether or not you're on a job, and every job has to help pay for them. This is overhead, and ignoring it is why 'profitable' jobs still leave you short at month's end.
Then add real profit
Profit is not your wage - you already paid yourself as labor. Profit is what the business earns above all costs, and it's what funds new tools, slow seasons, growth, and a cushion. A job that merely breaks even after your wage is a job that grows you nowhere.
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The hardest part isn't the math - it's saying your price out loud without flinching. Customers who value good work will pay a fair price; the ones who only want cheap were never good customers. Raising your prices usually loses you the worst jobs and keeps the best ones.
“I ran the numbers and realized I'd been underpricing for years. I raised rates 20%, lost a couple of tire-kickers, and made more money working less.”
Know your true costs, add overhead, then add a real profit margin - and hold the line. Pricing from your numbers instead of your gut is what turns a busy schedule into an actual living.
Common questions
It varies by trade and market, but many trades target a 20-40% profit margin on top of fully-loaded costs. The key is that it's on top of a real wage for your time, not instead of it.
Flat, per-job pricing is usually better for the customer (predictable) and for you (you're rewarded for efficiency). Price it from your estimated costs, not a raw hourly rate.
Gradually and with notice. Good customers rarely leave over a fair increase - and the ones who do free up time for better-paying work.