Key takeaways
- Price every job as labor + overhead + materials + a profit margin — not just your hourly rate times hours.
- Work out your overhead per billable hour first. It's the number that quietly sinks most contractors.
- Profit is separate from the wage you pay yourself. Aim for a margin that survives a bad week.
- Check the margin before you send the quote — not at tax time.
Short version: price every job as labor, plus overhead, plus materials, plus a profit margin on top. If you only charge for your time and materials, you're quietly paying out of pocket to run your own business. Below is the exact method I use — and the mistake that cost me real money before I learned it.
What's the right way to price a job?
Add up four things, in this order:
- Labor — your hours times what you actually want to earn per hour.
- Overhead — your share of the monthly bills that keep you in business, spread across those hours.
- Materials — what you pay, plus a markup (15–35% is normal).
- Profit — a margin on the whole thing, separate from your wage.
Most guys do one and three and call it a day. That's the trap. Your wage is what you pay yourself for swinging the hammer. Profit is what the *business* earns — and it's what lets you take a week off, replace a truck, or ride out a slow month.
How do I calculate my overhead per hour?
This is the number almost nobody knows, and it's the one that gets you. Overhead is everything you pay whether or not you're on a job: insurance, truck payment, fuel, tools, phone, software, license fees. Add up a normal month, then divide by the hours you can actually bill that month.
Worked example: $3,400 a month in overhead ÷ 120 billable hours = about $28 an hour. That's what every job has to cover before you've made a dime — on top of your pay and your materials.
Once you know that number, you bake it into every quote and it stops being invisible. That's the whole point.
How much profit should I add on top?
After labor, overhead, and materials are covered, add a margin. There's no magic number — it depends on your trade, your risk, and your area — but here's the gut check: if a $5,000 job only nets you $300 after everything, that's a 6% margin. One rained-out day or one bad measurement and you worked for free. I aim for a margin that survives a surprise. Getting your hourly rate right first makes this part easy.
Why copying the other guy's price will sink you
The contractor down the road charging $45 an hour might have a paid-off truck, no insurance, or no idea he's losing money. When you match his price, you inherit his problems. Your overhead is yours. Price off your numbers, not his.
The hidden costs that quietly eat your margin
These are the ones I used to "eat" without realizing it:
- Drive time and fuel between jobs
- Dump runs and disposal fees
- "Small" materials — fasteners, caulk, blades — that add up fast
- Change orders you do as a favor and never bill
Price them in from the start and you stop handing them out for free on every job.
This is exactly what JobPricer does for you: enter your overhead once and every quote shows labor, materials, overhead, and your real profit before you hit send.
Try it free →Frequently asked questions
What is a good profit margin for a contractor?
It varies by trade, but after you've paid yourself and covered overhead and materials, many contractors target a net margin of 10–20% or more. The key is that profit is separate from your wage — if your "profit" is really just your pay, you don't actually have a margin.
Should I show customers the line-item breakdown?
Usually, yes. Itemizing labor and materials builds trust and lets you add or drop parts of the job without re-quoting from scratch. Some contractors group their exact labor rate rather than exposing it — either works, as long as the scope is crystal clear.
How do I price a job if I don't know my overhead yet?
Spend twenty minutes adding up your monthly business bills, then divide by the hours you can bill in a month. Even a rough number beats zero, and you can sharpen it as you track real costs.
CWritten by Craig, founder of JobPricer
I ran a contracting business and finished 500+ jobs before I built JobPricer. Everything here is what I wish someone had told me when I started quoting.