How to price a job and actually make a profit

Plenty of skilled tradespeople are busy all year and still end up with very little to show for it. The work is good and the customers are happy, but the money never quite adds up. Nine times out of ten the problem is not the work, it is the pricing. Getting paid what a job is worth is a skill in itself, and it is one you can learn. This guide walks through how to price so that you actually make a profit, not just cover your costs.

Start with your real day rate. The free day rate calculator does the sum in this guide for you — target take-home, tax and National Insurance, annual overheads and billable days in, day rate out. Price every job up from that number.

Key takeaways: Cost, price and profit are three separate things, and mixing them up is where money leaks away. Work out a day rate that covers your take-home pay and your overheads, mark up materials fairly, and build profit in on purpose rather than hoping it is left over at the end.

Cost, price and profit are three different things

Your cost is what a job takes out of your pocket: materials, your time, fuel, plant hire. Your price is what you charge the customer. Profit is what is left after the cost is taken off the price. Sounds obvious, but a lot of quotes are really just costs with a bit added on top for luck. That is not pricing, that is guessing, and it is why so many busy trades run on empty.

Price on purpose. Decide what profit you want the job to make, then build the number up to include it, rather than seeing what happens to be left at the end.

Work out your real day rate

Most tradespeople underprice their day because they only think about the hours on the tools. Here is a fairer way to work it out. Start with what you want to earn in a year, then be honest about how many days you can actually bill for.

Say you want to take home £45,000. You will not bill 365 days. Take off weekends, holidays, the odd sick day, and all the time you spend quoting, buying materials, doing the books and sitting out bad weather. Most sole traders bill around 220 days a year at best. Now add your yearly overheads, say £12,000. That means you need to bring in £57,000 across 220 days, which is roughly £260 a day before tax, just to hit your target. If you have been charging £180, that gap is the profit you have been giving away.

Do not forget your overheads

Overheads are the costs that turn up whether or not you are working. It is easy to forget them because they do not appear on any single job. Add them all up for the year:

• Van finance, fuel, insurance and servicing

• Tools, replacements and calibration

• Public liability and other insurance

• Phone, software and accountant’s fees

• Training, certification and trade body membership

Divide the yearly total by your billable days and you have the overhead each day has to carry before you earn a penny. Miss this step and you can be busy all year and still go backwards.

Marking up materials

Charging materials at cost is a common mistake. You spent time sourcing, collecting, storing and guaranteeing them, and if something fails it is you who goes back to fix it. A markup of 10 to 20 percent on materials is normal and fair, and it reflects the real service you provide by standing behind the parts you fit. On bigger jobs, that markup can be a meaningful slice of your profit.

Price for profit, not just survival

There is a difference between a price that keeps the lights on and a price that lets the business grow. If every job only just covers its costs, you can never afford a new van, a quiet month, or a holiday. Building a genuine profit margin in, on top of your wage and overheads, is what turns a job into a business rather than a treadmill.

Do not race other trades to the bottom. There is always someone cheaper, and chasing them just trains customers to expect less. Compete on being reliable, tidy and professional, and price with the confidence that comes from knowing your numbers.

Quote or estimate: get the wording right

The two words are not interchangeable. A quote is a fixed price you are committing to. An estimate is your best guess, which can change if the job does. Use a quote when you can see the full scope, and an estimate when there are genuine unknowns, but always say which one it is in writing. Being clear up front saves the awkward conversation when the final bill lands.

Signs you are underpricing

• You win almost every job you quote for, which usually means you are too cheap

• You are flat out but there is never any money spare at the end of the month

• You feel a flash of dread when a customer asks for the price

• You cannot remember the last time you raised your rates

Use a solid baseline from our guide to UK day rates for trades, and make sure every allowable cost appears in your self-employed expenses.

If any of those sound familiar, it is time to look hard at your numbers. Pricing well is not about being greedy, it is about being paid properly for skilled work so the business can last. Knowing your costs, your day rate and your margins is the foundation, and any decent job-management tool, TradePilot included, can help you build consistent quotes from a saved price list so nothing gets left off.