How to price a job so you actually make money.
Price from cost, not a number in your head. Add up labour at your real hourly rate, materials plus a markup, and a share of your overhead (vehicle, insurance, super, your own pay) - then add the margin your business needs. Pricing off a gut "day rate" that never counted overhead is what quietly kills profit.
It's common to price a job by picking a number that feels about right, or matching what you charged last time. It wins work - but the margin you think you've got often isn't really there, because the price never counted the cost of running the business. Here's the method that fixes that, and it's the same whether you're pricing a paint job, an electrical install or a concrete pour.
Start from cost
A price that "feels right" is a guess dressed up as a decision. The fix is to build the price up from what the job actually costs you, then add profit on top - so the margin is a number you chose rather than whatever happened to be left.
What a job price is made of
Once you know your real hourly rate, a job price is just four things - no guessing:
- Hours × your real rate - the rate already carries overhead, super and your own pay, so you never count those twice
- Materials & parts at cost, plus a markup if you supply and warrant them
- Job-specific costs - tip fees, equipment hire, permits, a subcontractor, parking
- Your margin on top
Don't know your real hourly rate yet? Work that out first - it's the number this whole method leans on.
Then add your margin
Once cost is covered, margin is the profit that sits on top. Decide the margin your business needs - many tradies aim for 30% or more, but it's your call. The catch: margin only means something if it's on top of your real cost. Add 20% to a price that already undercounts overhead and you can still lose money on the job.
A worked example
Say your real hourly rate works out to $95, and you're quoting a half-day job:
- Labour: 4 hours on site + 1 hour travel and clean-up = 5 hrs × $95 = $475
- Materials: $120 at cost + 20% markup = $144
- Job-specific costs: consumables + parking = $30
- Margin: 25% on the $649 subtotal = $162
Price: about $811 (ex GST). Sense-check the effective rate: ($811 − $174 materials and job costs) ÷ 5 hrs = $127/hr, comfortably above your $95 floor. If it had landed under $95, the price is too low - not the job too small.
Check it before you send
The fastest sense-check is the effective hourly rate the price implies: the total minus your costs, divided by the hours the job will really take. If you know your real hourly rate, you'll spot a dud price in seconds - green if it's above your break-even, amber when it's marginal.
Work out your real hourly rate
Protect the price: variations
The fastest way to wreck a good price is the job changing after you've quoted. Two habits protect your margin: quote a clear scope (what's in, what's not), and put any variation in writing before you do the extra work - even a quick text. An hour of "while you're here" that never makes it onto the invoice comes straight out of your margin.
Markup and margin aren't the same number
This one costs real money when it's mixed up. Markup is added to cost; margin is the share of the final price. Put 20% markup on $120 of materials and you sell them for $144 - but the $24 you added is only 16.7% of the $144 line. A 25% markup is a 20% margin. Same numbers, different bases.
Why it matters: if you aim for "20% on materials" but apply it as markup, every materials-heavy job quietly lands under your target. Decide which number you mean, then apply it consistently - our markup calculator converts between the two so you can see both on the same line.
Price in the callback before it happens
Some jobs come back. A fitting weeps, a breaker trips, the paint needs a touch-up - and the return visit is on you: travel, hours, sometimes materials, none of it billable. That risk belongs in the price.
The margin is what absorbs it. Price a job at breakeven and a single callback puts it underwater; price with a real margin and the occasional callback is a cost of doing business instead of a loss. Work with a warranty-heavy trade or fussy finishes? Carry a fatter margin on those jobs specifically, and let the easy ones keep their own number.
Bigger jobs: deposit and progress payments
On a multi-week job, the price isn't the only decision - so is when the money arrives. Fund four weeks of materials and wages yourself and the job can be profitable on paper while your account goes backwards the whole time.
- Deposit before you order materials - the customer's commitment, and it means their job isn't running on your card. Note: some states cap deposits on home building work - check your regulator's rules for your trade and job size.
- Progress payments at named stages - rough-in, fit-off, completion - agreed in the quote, not negotiated mid-job.
- Invoice the stage when the stage finishes - a progress claim sent a fortnight late is an interest-free loan you didn't mean to give.
A quote and an estimate are different promises
A quote is a fixed offer for a defined scope - if the hours blow out, that's your cost. An estimate is a forecast that can move as the job reveals itself. Both are legitimate; problems start when you say one and mean the other. If you're giving a fixed price, the risk of the unknown sits with you - so the honesty of your hours count is the price. If the scope genuinely can't be pinned down (old switchboards, hidden plumbing, rot you can't see yet), say estimate, say why, and agree how you'll confirm the number once you're in.
The mistakes that keep showing up
- Copying someone else's rate. Their overhead isn't yours. A one-man band with a paid-off van and a crew owner with three utes can't sensibly charge from the same number.
- Pricing hours off your old wage. An employee's hourly rate never had to carry a vehicle, insurance, super or quiet weeks. Yours does.
- Counting only on-site hours. The quote visit, travel and supplier run are hours the job consumed. Leave them out and the price subsidises them.
- Free extras. "While you're here" work with no variation is margin walking out the door - a written variation takes a minute.
- Never re-checking the rate. Costs move - rego, insurance, fuel, materials. A rate set two years ago is a discount you didn't decide to give.
Rates differ by trade, and so do the licence and compliance costs a price has to carry. See what tradies charge in your trade - electricians, plumbers, carpenters - and what licensing actually costs in your state.
The quick method
- Count the real hours - including travel, set-up and clean-up.
- Cost the hours at your real rate, not your take-home pay.
- Add materials at cost, plus your markup.
- Add job-specific costs - tip fees, hire, permits, parking.
- Add margin and sense-check - check the effective hourly rate before you send.
Straight answers.
How do I price a job as an electrician (or any trade)?
The method is the same for every trade: cost the hours at your real hourly rate (which already carries your overhead), add materials at cost plus a markup, add any job-specific costs, then your margin. The numbers change between electrical, plumbing or painting - the maths doesn't.
What's a good profit margin for a tradie?
There's no single number - many tradies aim for 30% or more, but it's your call. What matters is that the margin sits on top of your real cost. Adding a margin to a price that already undercounts overhead is how a job can look profitable and still lose money.
Should I charge by the hour or by the job?
Either works, as long as the price covers your real hourly rate times the hours, plus materials, overhead and margin. A fixed price just shifts the risk to you - so your hours estimate has to be honest. If the job blows out, the margin is the first thing to disappear.
What's the difference between markup and margin?
Markup is added to cost; margin is the share of the final price. A 25% markup is a 20% margin - same dollars, different bases. Decide which number you're targeting and apply it consistently; mixing them up is why materials-heavy jobs quietly land under target.
Should I ask for a deposit on a trade job?
On anything beyond a short job, yes. A deposit taken before you order materials means the customer's job isn't funded on your card, and progress payments at named stages keep the cash following the work. Some states cap deposits on home building work - check your regulator's rules for your trade and job size.
Try the method on your next quote.
figrd works the effective hourly rate out in the quote builder as you type - overhead and travel included.