How to price a job: a plain guide for UK tradespeopleHow to price a job: a plain guide for UK tradespeople

Knowing how to price a job properly is what separates a busy week from a profitable one. Many tradespeople price from gut feel, a rival’s number or last year’s rate, then wonder why the books do not add up. This guide gives you a plain method you can use on any quote, and a way to check afterwards whether you were right.

Start with what a job really costs you

A job price has five parts. Leave one out and your margin pays for it.

1. Labour. The hours the job will take, multiplied by an hourly rate that covers the wages, the holiday and the admin behind every hour on site.
2. Materials. What you will buy or take from the van, at the price you pay, not the price in the catalogue.
3. Travel and time between jobs. Fuel, mileage and the time spent driving, which you cannot bill twice.
4. Overheads. Insurance, tools, software, vehicle costs and the phone, shared across the jobs you do. GOV.UK’s list ofexpenses a self-employed person can claim is a good checklist.
5. Contingency. A small allowance for the thing that is behind the wall.

A worked example

These numbers are made up to show the arithmetic. Use your own. Say a job needs 10 hours of labour at £40 an hour, £300 of materials and £50 of travel. The direct cost is £400 for labour, £300 for materials and £50 for travel: £750.

If you add 15 per cent for overheads, that is £112.50, making £862.50. If you then want a 20 per cent margin on the selling price, you do not add 20 per cent. You divide by 0.8, which gives about £1,078. Adding 20 per cent to cost gives £1,035 and a margin of only about 17 per cent. Mixing up margin and markup is one of the most common reasons a job loses money.

Quote from your own history, not from guesses

The best pricing information is in your finished jobs. How many hours did the last five like this take? What did the materials really cost? Where did you go over? If that is in your head, it is lost. If it is held against each job, you can price the next one in minutes.

That is why recording matters. Parts added to the job as they are used, receipts attached to it and time logged against it give you actual cost. The same record that invoices the customer then tells you whether the job paid.

Check the result after every job

After each job, compare three numbers:

• The hours you quoted against the hours taken.
• The materials you quoted against the materials used.
• The price you charged against the total cost.

If you keep missing the same number, such as hours on bathroom fits, adjust your next quote. Small corrections repeated over a year are worth more than one big price rise.

Present the quote so it gets accepted

A good price still loses work if the quote is vague. Keep it short and specific:

• Describe the work in plain words, with the address and the customer’s name spelt correctly.
• List the main materials and say what is not included.
• State how long the quote is valid, the payment terms and any stage payments.
• Send it the same day you visit, while the job is fresh in their mind.
• Follow up within a few days, because many quotes are lost to silence, not to price.

Mistakes that cost money

• Using an hourly rate that is really just a wage.
• Forgetting travel and the time spent buying materials.
• Pricing a job once and never revisiting it after the work is done.
• Adding a percentage for profit when you meant margin.
• Quoting without a note of what is included and what is extra, which invites arguments later.

How jobmate helps

jobmate’s quotes and invoices let you pick the customer and address from your database, add items that update stock, and use a global job rate that multiplies by the expected hours. When the job is done, expenses such as mileage and photographed receipts are allocated to it, and custom reports show costs and activities. You can read more on expenses and job costing. If parts are a big part of your price, our guide on how to manage van stock covers getting those costs right.

Pricing a job: common questions

How do I work out an hourly rate?

Start from what you need to earn and the hours you can actually bill in a year, after holidays, travel and admin. Then add your overheads. The result is higher than a wage, and that is correct.

What is the difference between margin and markup?

Markup is a percentage added to cost. Margin is the percentage of the selling price you keep. A 20 per cent markup gives a margin of about 17 per cent, which is why they should not be mixed up.

Should I quote a fixed price or by the hour?

A fixed price suits jobs you know well. Hourly or day rates suit jobs where the scope is unclear. Whichever you choose, write down what is included.

How do I know if I priced a job right?

Compare the quote with the real hours and costs once the job is done. If they are held against the job, it takes a minute.

Next step

To see a quote turn into a job, an invoice and a cost report in one system, Book a demo.