How to Price a Contractor Job
Most underpriced quotes have the same cause: the price is built by adding a percentage on top of cost (markup) when the owner was thinking in margin, and overhead is left out. Here is a simple four-step method that works for plumbers, electricians, painters, roofers, handymen and other home-service trades.
Step 1: Add up direct costs
Direct costs are what this job alone costs you: materials (including waste), labor hours times your cost per labor hour (wage plus taxes and insurance, see the labor burden calculator), and any subcontractor, dump or equipment rental fees.
Step 2: Add overhead
Overhead is the cost of running the business that no single job pays for: truck, insurance, phone, software, office time. A common shortcut is to express it as a percentage of direct costs. Your own number comes from last year's overhead divided by last year's direct costs.
Step 3: Price from margin, not markup
Price = total cost ÷ (1 − target margin). Adding 30% on top of cost gives only a 23% margin (why). If you want 30% of the price to be profit, divide by 0.70. The markup vs margin calculator converts between the two.
Step 4: Check discount, deposit and break-even
Before you send it, know your break-even price (total cost) and what happens if the client asks for 10% off. A discount comes straight out of profit: in the example below, 10% off drops the margin from 30% to about 22%.
Worked example
| Materials | $1,200.00 |
| Labor: 24 hours × $35 | $840.00 |
| Equipment rental | $300.00 |
| Direct costs | $2,340.00 |
| Overhead 12% | $280.80 |
| Total cost (break-even) | $2,620.80 |
| Price at 30% margin: $2,620.80 ÷ 0.70 | $3,744.00 |
| Profit | $1,123.20 (42.9% markup on cost, $46.80 per labor hour) |
| If the client gets 10% off ($3,369.60) | profit $748.80, margin 22.2% |
Try your own numbers in the free job price calculator.
Want this as a reusable spreadsheet?
The Contractor Quote & Margin Sheet does all four steps on one page in Google Sheets or Excel, including sales tax on materials, the deposit to ask for and the 10% discount check.
Figures are illustrative estimates for planning only. This is not accounting, tax or legal advice.