How to Price Your Services — A Guide for Contractors

    Learn how to calculate your hourly rate, price jobs, and make sure you're actually profitable.

    March 22, 20266 min read

    Pricing is the #1 mistake new contractors make. Most charge too little. Here's how to get it right.

    The Cost-Plus Formula

    Your Price = (Labor + Materials + Overhead) × Profit Margin

    ### Step 1: Calculate Your True Hourly Cost

    Most contractors only think about their hourly wage. But you also need to cover: - Vehicle expenses - Insurance - Tools and equipment - Phone and software - Marketing - Taxes (25-30% of income)

    ### Step 2: Add Material Costs

    Always mark up materials. The standard is 25-50% markup on parts and materials.

    ### Step 3: Add Your Profit Margin

    Profit is NOT your salary — it's what's left after all costs including your pay. Target 15-25% profit margin.

    Pricing Methods

    Hourly Rate: Good for repair work and small jobs. Charge $75-$200/hour depending on trade and location.

    Flat Rate: Better for standard services. More profitable if you're efficient.

    Per-Unit: Best for installations (per square foot, per fixture, etc.).

    Common Pricing Mistakes

    1. Not accounting for drive time
    2. Forgetting overhead costs
    3. Matching the cheapest competitor
    4. Not raising prices annually
    5. Giving free estimates on large jobs

    Quick Rule of Thumb

    If you want to make $60,000/year, charge at least $75/hour after accounting for non-billable time and overhead.