Pricing a job is where many tradies either win the work or lose their shirt. Get it too high and you’ll scare off customers; too low and you’ll be working for nothing. The key is to build your price from first principles—materials, labour, overheads, and margin—so every quote is both competitive and profitable. Here’s how to price a job the right way, every time.
Why Pricing a Job Right Matters
Your quote is more than a number—it’s a promise. It tells the customer what they’ll pay and what they’ll get. But if you don’t include all your costs, you’re essentially subsidising the job from your own pocket. Accurate pricing ensures your business stays viable, your team gets paid properly, and you can reinvest in tools and growth.
The Cost of Getting It Wrong
Underpricing might win you a few jobs, but it leads to cash flow problems, stress, and resentment. Overpricing loses work and damages your reputation. A structured approach to pricing removes guesswork and gives you confidence in every quote you send.
The Four Building Blocks of a Profitable Quote
Every job price is made up of four components. Miss any one, and your margin will suffer.
1. Materials and Supplies
This is the actual cost of the parts and products you’ll use. Don’t just estimate—get real prices from your suppliers. Include delivery fees, sourcing costs, and any consumables like screws, tape, or fittings. If you’re ordering something special, factor in the time it takes to get it.
2. Labour Costs
Your labour rate should cover more than just your hourly wage. It needs to include your team’s wages, superannuation, workers’ compensation, and any other employment costs. Multiply your fully loaded hourly rate by the estimated hours for the job, including setup, travel, and cleanup.
3. Overheads and Business Costs
Overheads are the costs of running your business that aren’t tied to a specific job—insurance, vehicle costs, office expenses, marketing, and admin. These need to be allocated to each job, usually as a percentage of your total costs. A common approach is to add 10–20% on top of materials and labour to cover overheads.
4. Your Margin (Profit)
Margin is what’s left after all costs are covered. It’s your reward for taking on the risk and running the business. A healthy margin for trade businesses is typically 20–30%. Without it, you can’t grow, upgrade equipment, or weather slow periods.
Step-by-Step: How to Price a Job (with the Oak Street Example)
Let’s walk through a realistic example. Imagine a plumbing job at Oak Street—replacing a hot water system. Here’s how to price it.
Step 1: Scope the Job and List Materials
First, list every material you’ll need. For the Oak Street job, that might include the new hot water unit, pipes, fittings, and a pressure relief valve. Get quotes from suppliers and add them up.
- Hot water unit: $1,200
- Pipes and fittings: $150
- Valves and misc: $50
- Delivery: $30
Total materials: $1,430
Step 2: Estimate Labour Hours
Next, estimate how long the job will take. Include time for the initial inspection, the installation, testing, and cleanup. For this job, you might allow 6 hours.
If your fully loaded labour rate is $80 per hour, that’s:
6 hours × $80 = $480
Step 3: Add Overheads
Now allocate overheads. If your overheads are 15% of materials and labour, calculate:
($1,430 + $480) × 0.15 = $286.50
Step 4: Apply Your Margin
Add your desired margin. If you want a 25% margin on top of all costs, first total the costs:
$1,430 + $480 + $286.50 = $2,196.50
Then apply the margin:
$2,196.50 × 0.25 = $549.13
So your total price would be:
$2,196.50 + $549.13 = $2,745.63
Round it to a sensible figure, say $2,750.
Step 5: Write the Quote
Present your quote clearly, with an itemised breakdown of materials, labour, and any other costs. This builds trust and reduces the chance of disputes. Include your payment terms, validity period, and what’s included (and what’s not). For more tips, see our guide on how to write a quote.
Common Pricing Mistakes to Avoid
Even experienced tradies fall into these traps. Watch out for them.
Underestimating Time
It’s easy to be optimistic about how long a job will take. Add a buffer for unexpected delays, like hidden damage or difficult access. A good rule of thumb is to add 10–20% to your time estimate.
Forgetting Hidden Costs
Travel time, parking, tolls, and disposal fees can add up. Make sure you include them in your quote. If you’re not sure what to include, check our job costing guide for a full checklist.
Discounting Too Easily
Some customers will ask for a discount, but don’t slash your price without understanding what you’re giving up. If you discount, reduce your margin, not your costs. Otherwise, you’re paying for the privilege of doing the job.
Using Job Costing and Quoting Tools
Manually calculating prices is fine for simple jobs, but as your business grows, you need consistency. Job costing software helps you track actual costs against estimates, so you can refine your pricing over time. Quoting software for tradies lets you create professional quotes quickly and ensures you don’t forget any line items.
How Software Helps You Stay Consistent
With the right tools, you can build a price list for common jobs, apply your overheads and margin automatically, and generate quotes in minutes. This not only saves time but also reduces errors. You can even track which jobs are profitable and which aren’t, so you can adjust your pricing strategy.
Final Checklist Before You Send a Quote
Before you hit send, run through this checklist:
- [ ] All materials are listed with accurate prices.
- [ ] Labour hours are realistic and include setup and cleanup.
- [ ] Overheads are allocated.
- [ ] Margin is applied.
- [ ] The quote is itemised and easy to understand.
- [ ] You’ve included your terms and conditions.
Pricing a job doesn’t have to be a guessing game. By following this framework, you’ll create quotes that are fair to your customers and profitable for your business. If you’re still unsure how to price a job, consider using a profit margin calculator to double-check your numbers. For more resources, explore our tools and templates or start a free trial of Yes Foreman to streamline your quoting process.