How do contractors price a job?

Add up the real cost of materials (at current prices) and labour (hours × a fully-loaded rate), then apply a markup that covers overhead and profit — typically 1.5×–2× cost, or pricing to a 40–50% gross margin. Always check the resulting margin before sending the quote.

What is the difference between markup and margin?

Markup is added on top of your cost; margin is profit as a percentage of the final price. A 30% markup gives only about a 23% margin. To keep a 30% margin you need roughly a 43% markup. Always check the margin on the final price, because that is what you actually keep.

What markup should a contractor use?

A 1.5×–2× markup on direct cost is common in the trades, producing a 33–50% gross margin. The right number depends on your overhead and local market — the key is to price so the job pays for your materials, labour, business overhead, and a real profit, then verify the margin before sending.

How to Price a Job as a Contractor

The four-step pricing method

Pricing a job is not a dark art. It is four steps, done in order, every time.

1. Cost the materials

List every material the job needs and price it at what it costs you today, not what you remember paying. Material prices move, and pricing from memory is one of the quietest ways contractors lose money.

2. Cost the labour

Estimate the hours honestly and multiply by a fully-loaded labour rate — not just your wage, but wage plus the share of overhead each working hour has to carry. If you pay yourself $40/hr but your true cost of being in business is $85/hr, price at $85.

3. Add markup for overhead and profit

Your direct cost (materials + labour) is not your price. Apply a markup so the job also pays for the truck, insurance, slow weeks, and actual profit. A 1.5×–2× markup on cost is common, which works out to a 33–50% gross margin.

4. Check the margin before you send

Before the quote goes out, calculate the gross margin: (price − materials − labour) ÷ price. If it is below your target, fix it now — not after the job, when it is too late.

Markup vs margin — the mistake that costs the most

This trips up more contractors than anything else, so it is worth being precise. Markup is added to your cost. Margin is the profit as a share of the price. They are not the same number.

If a job costs you $1,000 and you add a 30% markup, you charge $1,300 — but your margin is only 23%, because $300 of profit on a $1,300 price is 23%, not 30%. To actually keep 30% margin, you need roughly a 43% markup.

Contractors who confuse the two think they are pricing for 40% and are actually netting 28%. Across a year of jobs, that gap is enormous. When in doubt, always check the margin on the final price, because the margin is what ends up in your pocket.

Pricing fast and consistently on site

The method only helps if you can run it quickly, in a driveway, before the client loses interest. Two things make that possible.

A current price list. If your item prices live somewhere you trust and can pull up instantly, steps 1 and 2 take seconds instead of guesswork. Fieldpaid pulls your items and prices straight from QuickBooks, so a quote is assembled from real numbers on site, not estimated from memory.

A margin check you cannot skip. Seeing the margin on every quote before you send it turns pricing from a gut feeling into a decision. You can sanity-check a single job with the job profit calculator.

How to Price a Job as a Contractor (Without Guessing or Losing Money)