Contractors, consultants and service businesses of every size win jobs every week that end up paying less than expected. The usual cause is a price built on direct costs alone.
Count every direct cost
- Labor: hours times the full cost of each hour, including payroll taxes.
- Materials and equipment.
- Subcontractors.
- Permits, disposal, travel and anything else the job needs.
Add your overhead
Insurance, the truck, the phone, software, the office and your own time running the business all have to be paid by the jobs. Express overhead as a percentage of direct costs and add it to every estimate.
Then decide on margin
Profit is what is left after direct costs and overhead. Decide the margin you need before you quote, and price from it.
Check after every job
Compare the estimate to what the job really cost. That is how the next estimate gets better.
Our job profit calculator shows the cost, profit and margin of any quote.
This article is general information, not legal, tax or regulatory advice. Rules change; confirm current requirements with the responsible agency or a licensed professional.
