Pricing
How to price a job: the complete guide for trade businesses
Quick answer
Add up the real cost of every labor hour (including travel and cleanup), the materials and a share of your monthly overhead, then divide the total by one minus your target margin. A $1,494 job at a 20% margin should be quoted at about $1,870.
On this page
- The four things every price has to pay for
- Step 1: work out what an hour of labor really costs
- Step 2: count the hours the customer never sees
- Step 3: give every hour its share of overhead
- Step 4: price materials at what they really cost you
- Step 5: add profit the right way
- A worked example from start to finish
- Hourly, flat rate or per unit?
- Set a minimum job charge
- Check your price against the market last, not first
- The mistakes that eat the most money
- What to do next
Picture this: you finish a two-day job, the customer is happy, the invoice gets paid on time, and at the end of the month there is still less money in the account than there should be. Nothing went wrong on the job. The problem was already in the price, before you loaded the van.
Most pricing mistakes are not arithmetic mistakes. They are missing costs: the hour driving to the job, the quote visit that never turned into a sale, the share of the insurance bill that every job should carry, and the profit that never made it into the number. This guide walks through the method step by step, with one worked example you can copy with your own figures. If you want the short version, the job price calculator does the same math for you.
The four things every price has to pay for
Every job you quote has to cover four things. Leave one out and you are paying for it yourself.
| Part of the price | What it includes | The usual mistake |
|---|---|---|
| Labor | Every hour the job takes, for every person, at what that hour really costs you | Counting only the hours on site |
| Materials | Everything the job consumes, including delivery and small consumables | Forgetting tape, bags, blades, fuel |
| Overhead | A share of the costs you pay every month whether you work or not | Leaving it out because it "isn't part of the job" |
| Profit | What the business keeps after every cost is paid | Treating your own wage as the profit |
The last row matters more than it looks. If you work in the business, your pay is a labor cost. Profit is what is left after you have paid yourself, and it is what pays for a new truck, a slow month or the next hire.
Step 1: work out what an hour of labor really costs
The wage you pay is only part of what an hour of work costs the business. On top of it come payroll taxes, workers' compensation, paid time off and any benefits you offer.
The Bureau of Labor Statistics measures this every quarter. In June 2026, wages and salaries were 70.0 percent of what private employers spent on compensation, and benefits were the other 30.0 percent. In other words, for every dollar of wages, the average private employer spent about 43 cents more on everything else.
That is a national average across every kind of business, not your number. A small crew with no health plan will spend less; a crew with a high workers' comp rate may spend more. But it gives you a quick way to check yourself. If you pay a worker $22 an hour and you use the national mix, the real cost is about $22 ÷ 0.70 = $31.43 an hour. Replace 0.70 with your own figure once you have a few months of payroll to look at.
If you work alone, the same idea applies to your own pay. Decide what you need to earn per hour as a wage, then remember that as a self-employed person you pay both halves of Social Security and Medicare. The IRS sets the self-employment tax at 15.3 percent, made up of 12.4 percent for Social Security and 2.9 percent for Medicare, and it applies once your net earnings from self-employment reach $400 in a year. Income tax comes on top of that.
Step 2: count the hours the customer never sees
Here is where most quotes lose money. The customer sees the time you spend on their property. You pay for much more:
- driving to and from the job, and to the supplier
- the visit to look at the job and measure
- loading and unloading
- setup, cleanup and taking rubbish away
- the callback when something needs a touch-up
Say a job takes six hours on site. Add an hour and a half for the drive, the supplier stop and the cleanup, and the real job is seven and a half hours per person. If you price six, you work one and a half hours for free on every job. Across a year that is weeks of unpaid work.
I'd rather quote a few dollars high and explain why than quietly give away a fifth of my time.
Step 3: give every hour its share of overhead
Overhead is everything you pay to stay in business: insurance, the vehicle and its fuel, phone, software, accounting, advertising, tools that wear out, the storage unit. Add it up for a normal month.
Then divide it by billable hours, not by the hours you are paid for. A person who works 40 hours a week is paid for about 173 hours a month, but some of those hours are spent on quotes, driving, weather days and admin. If only 120 of them end up on an invoice, those 120 hours have to carry the whole overhead bill.
| Monthly overhead (example) | Amount |
|---|---|
| Insurance | $450 |
| Vehicle payment, fuel and maintenance | $1,100 |
| Phone, software, accounting | $300 |
| Advertising | $350 |
| Tools and equipment wear | $200 |
| Total | $2,400 |
With $2,400 of overhead and 120 billable hours, every billable hour has to carry $20 of overhead. These figures are only an example to show the method. Use your own bank statements for the real ones.
Step 4: price materials at what they really cost you
Materials are the easy part because you have receipts. The mistakes are the small things: masking tape, sanding pads, trash bags, blades, fuel for the mower, the second trip to the store. Keep a short list of consumables for each type of job and add them every time.
Whether you add a markup on materials is a business decision. Some owners pass materials through at cost and put all their margin on labor. Others add a handling percentage because they pay for the materials weeks before the customer pays them. Both work, as long as the final price still includes the profit you planned.
Step 5: add profit the right way
This is the step that catches people who are good with numbers. If you want 20 percent of the final price to be profit, you cannot just add 20 percent to your costs.
Adding 20 percent to $800 of cost gives $960. The profit is $160, which is only 16.7 percent of $960. To keep 20 percent of the final price, divide your costs by one minus the margin:
Price = total cost ÷ (1 − margin)
$800 ÷ 0.80 = $1,000. Now the profit is $200, which is exactly 20 percent of the price. The difference between the two methods has its own guide: markup vs margin.
A worked example from start to finish
Let's say you are quoting an interior repaint of two bedrooms for a two-person crew. Using the numbers from the steps above:
| Line | How it is worked out | Amount |
|---|---|---|
| Labor hours | 2 people × (10 hours on site + 2 hidden hours) = 24 hours | 24 h |
| Labor cost | 24 h × $31.43 | $754.29 |
| Overhead share | 24 h × $20 | $480.00 |
| Materials | Paint, primer, caulk, tape, plastic | $260.00 |
| Total cost | $1,494.29 | |
| Price at 20 % margin | $1,494.29 ÷ 0.80 | $1,867.86 |
| Rounded quote | $1,870 |
The profit on that job is about $376, a little over 20 percent of the price. If the customer pushes back, you now know exactly which line you are cutting, and you can offer something real in exchange, such as one color for all the walls or the customer moving the furniture.
For painting specifically, the guides on bidding a paint job and estimating by the square foot turn this method into a quote the customer can follow.
Hourly, flat rate or per unit?
The method is the same. What changes is how you show the price to the customer.
| Pricing style | Works best when | Watch out for |
|---|---|---|
| Hourly | The scope is unclear, like repairs or "while you're here" jobs | Customers watching the clock; a fast worker earning less |
| Flat rate per job | You have done the job many times and know how long it takes | Surprises you did not price in, such as rotten wood behind the trim |
| Per unit (square foot, room, visit, acre) | Jobs that scale with size | Units that hide extra work, like heavy prep or hard access |
Each trade tends to settle on one style. Handyman work is often hourly with a minimum (how to set a handyman rate). Lawn care is priced per visit or per season (bidding lawn care jobs). Pressure washing is often per square foot or per job (pricing pressure washing), and cleaning is usually a flat price per visit (pricing house cleaning).
Set a minimum job charge
Small jobs still cost you the drive, the setup and the paperwork. Using the same numbers, a one-hour job with an hour of hidden time costs 2 hours × $31.43 in labor plus 2 × $20 in overhead, about $103. At a 20 percent margin that is roughly $129 before any materials.
Quote less than that and a job that looks easy loses money. A clear minimum charge, stated up front, also filters out customers who were only ever going to call once.
Check your price against the market last, not first
Once you know your number, it is worth knowing what others charge. But the order matters. If you start from a competitor's price, you are copying their costs, their mistakes and their margin without knowing any of them.
If your price is higher than the market, look for the reason before you cut it. You might be serving an area with long drives, you might have more overhead than a one-person business, or you might be quoting a better job. Sometimes the answer is to change the kind of work you chase, not the price.
The mistakes that eat the most money
- Counting only the hours on site.
- Paying yourself out of the profit instead of treating your wage as a cost.
- Spreading overhead over paid hours instead of billable hours.
- Adding a percentage to costs and calling it margin.
- Having no minimum charge.
- Never updating prices after insurance, fuel or wages go up.
What to do next
Start with your real hourly labor cost and your monthly overhead, because every other number depends on them. Then run your next quote through the steps above, or open the calculator and let it do the arithmetic.
If you are still setting the business up, the guide to starting a home service business covers the steps that come before the first quote.
Frequently asked questions
What profit margin should a trade business aim for?
There is no single right number: it depends on your trade, your market and how much risk each job carries. What matters is choosing a margin on purpose and calculating it on the final price, not as a percentage added to cost.
Should I charge for travel time?
Yes, one way or another. You can show it as a trip charge or build it into the price, but the hours spent driving are paid hours and have to be covered by the job.
Should I include my own wage in the price?
Yes. If you work in the business, your pay is a labor cost like any other. Profit is what is left after you have paid yourself.
How often should I update my prices?
Whenever a big cost changes, such as insurance, fuel or wages, and at least once a year. Rebuilding a few recent jobs with your current costs will show if you are behind.