Pricing is the highest-leverage decision in a service business. A 10% pricing improvement drops almost entirely to the bottom line, while a 10% volume increase only moves profit by 2–3%. Yet most owners price by feel, by what they charged last time, or by what the competitor charges. This guide gives you a repeatable formula.
The five-step pricing formula. Direct costs: materials, parts, sub-contractors, equipment rental, permits, disposal. Look up real numbers — don't guess.
Worked example: a $400 service job.
The three pricing mistakes that kill margin. Mistake one: pricing labor at wage instead of loaded rate. You forget to recover payroll taxes, vacation, vehicle, and tools. Fix: always use the loaded rate.
Use a calculator instead of math on paper. Our Pricing Calculator and Markup Calculator do the formula for you. Plug in costs and target margin; get the price. Worth using on every quote until the math becomes second nature.
Frequently asked questions
How do I price a job I have never done before?
Estimate hours optimistically, then add 50% for the unknown. After you finish the first one, document actual hours. By the third job you will have a real number.
Should I round my quotes to whole numbers?
Round to $5 or $10. $395 looks priced; $403.17 looks like a robot wrote it. Round always up, never down.
What if the customer says my price is too high?
Ask: 'Compared to what?' Then either justify the value, offer a reduced-scope version, or walk away. Never drop price without dropping scope — it teaches the customer you were padding.
