How to Price a Job Properly (Without Undercharging or Scaring Customers Off)

Every trade has done it. You look at the job, do a bit of sums in your head, say a number out loud — and the customer says yes far too quickly. Three days later you're still there, you've been back to the merchants twice, and you've worked out you're earning less than the lad who fitted your kitchen.

Pricing is the part nobody teaches you. You learn the trade, not the maths behind it. So here's a straight way to work out what a job is actually worth, without either short-changing yourself or frightening off good customers.

Start with what an hour of your time really costs

Most trades pick a day rate by asking a mate what they charge, or by guessing what the area will stand. The problem is that your rate has to cover a lot more than the hours you're stood on site.

Before you land on a number, add up what the year actually costs you:

• The van. Finance or lease, insurance, fuel, tax, MOT, servicing, tyres — it adds up to thousands before you've turned a screw.
• Tools and kit. Replacements, repairs, calibration, PPE, consumables. Something always breaks.
• The boring stuff. Public liability, trade body membership, accountant, phone, software, waste carrier licence, directory fees.
• The hours nobody pays for. Quoting, driving, invoicing, chasing money, merchant runs. Easily a day a week that no customer is billed for.
• Time you're not working at all. Holidays, bank holidays, and the weeks you're ill or the weather stops you. If you never price these in, you can't afford to take a week off without it costing you.

That last one catches people out badly. There are 52 weeks in a year, but you're not billing 52 of them. Take off holidays, illness, bank holidays and quiet spells and most sole traders bill somewhere around 40 weeks — and only four days of each of those, once you allow for the admin day.

Do the maths once, properly

You only need to do this once a year, on the sofa, with a brew. It goes like this:

• Decide what you want to earn. Not what you'd settle for — what the job is worth for the skill and the risk you carry.
• Add your yearly running costs on top. Everything from the list above.
• Divide by the days you'll actually bill. Around 160 to 180 is realistic for a sole trader working full-time.

Say you want £45,000 and your overheads come to £15,000. That's £60,000 to cover, over 170 billable days — about £353 a day. If you've been quoting £250 because it's "what everyone round here charges", you've just found out why the money never seems to be there at the end of the month. And remember tax and National Insurance come out of your side of that, so it isn't take-home either.

The numbers will be different for your trade and your area — a plumber in a market town and a builder in London will land nowhere near each other. The method won't change.

Then price the job, not just the hours

A day rate is the floor, not the answer. Once you know yours, price each job on top of it:

• Materials, plus a margin. You're carrying the cost, the trip to the merchants and the risk if something's faulty. Marking materials up is normal and fair.
• Access and awkwardness. Third floor, no parking, tight loft, customer working from home in the next room — all of it costs you time.
• Muck away and making good. Skip hire and a proper clean-up are real costs that get forgotten in a rushed quote.
• A bit of slack. Old houses lie to you. Ten percent contingency stops one nasty surprise wiping out the whole job's profit.
• Payment terms. For anything sizeable, take a deposit for materials and stage the rest. It's the simplest way to avoid chasing an unpaid invoice later.

Then put it in writing, itemised, so the customer can see what they're paying for. A clear quote wins more work than a cheap one — here's how to write a quote that wins the job.

"That's more than the last bloke quoted"

You'll hear it. Sometimes it's a fair question and worth talking through. Often it's someone shopping purely on price, and those are rarely the customers you want — they're the ones who haggle at the end, pay late, and never ring you again. There's a knack to spotting them early, which is half of handling time-wasters.

Dropping your price to win a job you've priced properly doesn't get you a customer. It gets you a week's work at a loss and a customer who expects that price forever.

Compete on everything except price

Here's the bit worth remembering: most customers don't actually pick the cheapest quote. They pick the trade they trust — and trust is built out of things that cost you nothing.

Turning up when you said you would. A tidy, itemised quote. A decent set of reviews from people in their street. And, more than anything, answering quickly — the trade who replies first is very often the one who gets the job, even when they're not the cheapest.

That's why the maths above only pays off if the enquiries actually reach you. You can price every job perfectly and still be skint if half your callers ring out while you're on the tools, because a job you never quoted for earns you nothing at all.

Put your prices up in the spring

Don't do it job by job — you'll bottle it. Pick a date, review your rate once a year, and quote the new number from then on with no apology and no explanation. Existing customers can get a heads-up if you like. Most people won't blink. The ones who do were never going to be your best work anyway.

Price properly, quote clearly, and pick up the phone faster than the next trade. That's the whole game.

ReplyBack texts your missed callers back the second you can't answer, so the jobs you've worked so hard to price right actually make it as far as a quote. Try it free for 14 days.