How to price a job: a method you can do on your phone
Hours, materials, markup. Three numbers, and the one most contractors get wrong is the first.
Pricing a job is not guessing a number that feels right and hoping it covers everything. It is three numbers added together, and once you know your version of each, you can price most jobs standing in the driveway.
1. Labor: hours times your real rate
Your real hourly rate is not what you would like to earn per hour. It is what you have to charge per billable hour to cover your pay, your truck, your insurance, your tools, your phone, the hours you spend driving and quoting that nobody pays for, and a profit. Most solo contractors who work it out for the first time find the number is higher than the one they have been using. Work yours out here, once, and write it down.
Then estimate the hours honestly. Include setup, cleanup, the trip to the supply house, and the callback. If a job is two days, it is sixteen hours, not twelve.
2. Materials: what you pay, plus a markup
Materials cost what they cost, plus the time to source them, the ones that get damaged, the returns, and the fact that you fronted the money. A markup of 15 to 30 percent on materials is normal in most trades. Charge at least the retail price if your customer could have bought the item at the same store, and do not itemize it below that.
3. Markup on the whole thing, or margin
This is the number that gets confused most. Markup is a percentage added to your cost. Margin is the percentage of the final price that is profit. A 25 percent markup is a 20 percent margin. If you aim for a 25 percent margin and apply a 25 percent markup, you are leaving money on every job. The calculator shows the difference.
Put it together
Labor hours times rate, plus materials with their markup, plus your markup on the total, rounded to a number that reads cleanly. "$2,400" lands better than "$2,386.50" and the customer will not haggle over the fourteen dollars. The job price calculator does the arithmetic from your three numbers.
What to show the customer
The total, the scope, and the terms. Not the hours, not the rate, not the markup. Those are how you got to the number. The customer is buying the finished job. Itemizing your margin invites a conversation about your margin.
Two checks before you send it
- Would you be happy to do this job for this price if it takes 20 percent longer than you think? If not, the price is low.
- Is anything in the scope that you have not priced? Haul-off, permit, patching, paint. Each one unpriced is free work.
Once the number is right, the estimate is the easy part. What to include, and finished examples by trade.
Free, no account: job price calculator, markup vs margin, hourly rate, and 84 sample estimates.
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