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TradeFlare BlogHow to Price a Job as a Contractor (Without Guessing)
Learning how to price a job as a contractor is mostly learning what your hour really costs. Price from your real costs, add overhead and profit on purpose, and you stop winning jobs that lose money. Here is a simple method that works for any trade.
Step 1: Know your true labor cost
A tech's hourly wage isn't the cost of their hour. Add payroll taxes, workers' comp, insurance, paid time off and any benefits. That's the burdened labor rate. Then remember that not every paid hour is billable. Drive time, shop time and callbacks all get paid. Your price per billable hour has to cover them.
Step 2: Add your overhead
Overhead is everything that keeps the doors open: trucks, fuel, insurance, rent, phones, software, advertising, accounting, licensing. Add it up for a year and divide by your billable hours. That gives you an overhead cost per billable hour to add on top of labor.
Step 3: Price materials with a markup
Materials cost more than the receipt. Someone ordered them, picked them up, stored them and warrantied them. Many contractors mark up materials to cover that time and risk. Decide your markup and apply it consistently.
Step 4: Add profit on purpose
Profit isn't what's left over by accident. It's a line you plan for. It pays for new equipment, slow months and growth. Add it as a margin on top of labor, overhead and materials.
Step 5: Account for risk
Some jobs carry more unknowns: old houses, hidden damage, tight access, difficult customers. Add contingency for those, or write clear allowances and exclusions so changes become change orders.
Step 6: Check against the market
Compare your number with what established shops nearby charge. If you're far below, you may be underpricing. If you're far above, make sure your estimate explains the value: warranty, speed, licensing, clean work.
Put it together
Price = (labor hours × burdened rate) + (labor hours × overhead per hour) + (materials × markup) + contingency, then add your profit margin. Save the common tasks in a price book so you don't redo the math every time.
Review jobs after they're done
Compare estimated hours and materials with actual ones. Adjust your price book where you're consistently off.
Mistakes to avoid
- Pricing from the wage instead of the burdened rate.
- Forgetting drive time and shop time.
- Matching the lowest bid in town to win work.
- Never comparing estimated and actual hours after the job.
Your next step this week
Work out your burdened labor rate and overhead per billable hour this week, using last year's numbers. Compare them with the prices in your price book. Update any service that falls short before you send your next quote. Then set a reminder to repeat the math every six months, because insurance, fuel and wages rarely stand still.
How TradeFlare helps
Price book and quotes. Save your services and prices once, even by voice, and reuse them on every quote. Send the quote from your phone, watch it go Draft > Sent > Viewed > Accepted, and turn it into a job with Make it a job. Unanswered quotes get an automatic follow-up.
Quotes, change orders and invoices. Build quotes from your price book, let the customer sign right on the quote, add change orders when the job changes, and create the invoice from the quote, the job or from scratch. Past-due invoices get a friendly reminder automatically.
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Frequently asked questions
What is a good profit margin for a contractor?
It varies by trade, market and job type. The key is to add profit as a planned line on top of labor, overhead and materials.
How do I include overhead in my prices?
Add up a year of overhead costs, divide by your billable hours, and add that amount to every billable hour you price.
Can I save my prices for reuse?
Yes. TradeFlare's price book stores your services and prices, even by voice, and reuses them on every quote.