How to Price a Job as a Contractor

June 22, 2023
Featured image for “How to Price a Job as a Contractor”

Venturing into the contracting world can be as exciting as it is challenging. One of the main challenges contractors face is setting the right price for their services. This task is an intricate balance between covering your costs and ensuring profitability, while also staying competitive within your market. But don't fret, we're here to guide you through the process and make sure you can confidently price your jobs like a pro.

Understanding the Contractor Industry

The Role of a Contractor

As a contractor, you wear multiple hats. While your main role may involve construction work, electrical installations, or plumbing, you also need to navigate the business aspects. This includes sourcing materials, hiring and paying employees, budgeting for overhead expenses, and more importantly, setting the right prices. A contractor pricing strategy isn't just about covering your costs, but also ensuring that you make a profit for your business to grow and thrive.

The Economics of Contracting

The contracting industry is a dynamic and fluid ecosystem. Market trends shift, labor costs fluctuate, and the price of materials can rise and fall with market demands. In addition, there are also indirect costs like insurance, equipment maintenance, and even your own salary to consider. Navigating through these economic complexities is crucial for creating a viable contractor pricing strategy model.

Contractor Pricing a Job

Crucial Steps to Price a Job as a Contractor

Determining Material Costs

The first step towards pricing contractor job is determining the cost of materials. You'll need to research various suppliers to get the best prices without compromising on quality. Additionally, it's also important to factor in potential future price increases, especially for long-term projects. Having a buffer for such contingencies will save you from unexpected expenses down the line.

Estimating Labor Costs

Labor costs constitute a significant part of your overall expenses. This includes your own salary and the wages of your employees or subcontractors. Don't forget to include costs like taxes, insurance, training, and benefits, which are often overlooked but can add up over time. Always factor in these elements while estimating labor costs. Consider using our contractor software for estimating to help grow your business.

Including Overhead Costs

Overhead costs are the expenses that keep your business running, even when you're not working on a specific job. They include office rent or mortgage, utilities, equipment maintenance, insurance, and more. These costs should be spread out over the jobs you complete throughout the year. It's vital to account for these in your contractor pricing model to ensure they're covered.

Pricing for Profit

Once you've calculated all the costs associated with a job, it's time to consider your profit margin. This is what you aim to earn over and above your expenses. The exact percentage can vary depending on the complexity of the job, market conditions, and your business goals. However, a typical range can be anywhere from 10% to 20%. Remember, pricing for profit is not being greedy – it's an essential part of running a successful business.

Try our Contractor Management Software to help grow your business

Mistakes to Avoid When Pricing a Job

Underpricing Your Services

While it might be tempting to lower your prices to attract more clients, underpricing your services can lead to financial losses in the long run. If your prices don't cover your costs and leave room for profit, your business may struggle to survive, let alone grow. Therefore, it's essential to price your services accurately.

Overpricing Your Services

On the flip side, overpricing your services can deter potential customers, causing you to lose business to more competitively priced competitors. Striking the right balance is key. Your prices should reflect the quality of your work and the value you provide, without being prohibitively expensive for your target market.

Neglecting Market Research

Market research is the backbone of a successful pricing contractor job strategy. By understanding what your competitors are charging for similar services, you can ensure your prices are competitive and realistic. Neglecting market research can result in either underpricing or overpricing your services, both of which can negatively impact your business.

Contractor with Materials

Tips to Improve Your Pricing Strategy

Regularly Update Your Pricing

Your costs and the market dynamics will change over time, so your contractor pricing strategy should not be static. Regularly reviewing and updating your prices can help you stay competitive while ensuring your costs are covered and your business remains profitable.

Utilize Technology

The digital age offers many field service software solutions that can make the task of pricing jobs easier and more accurate. These tools can help you keep track of material and labor costs, automate the calculation of overhead expenses, and even analyze market trends. Don't hesitate to leverage this technology to improve your pricing strategy and overall business operations.


Pricing a job as a contractor is a multifaceted process that requires understanding your costs, knowing the market, and considering your business goals. By avoiding common pitfalls and continuously refining your pricing contractor strategy, you can ensure that your prices are competitive, your costs are covered, and your business is profitable. With the right approach and tools, you can master the art and science of contractor pricing and set your business up for success.


  1. What should a contractor include in the cost of a job? A contractor should include material costs, labor costs, overhead costs, and a profit margin in the job cost.

  2. How can I improve my pricing strategy as a contractor? Regularly updating your pricing, performing market research, and utilizing technology can significantly improve your pricing strategy.

  3. What are common mistakes contractors make when pricing a job? Common mistakes include underpricing or overpricing services and neglecting market research.

  4. Why is market research important for a contractor? Market research helps contractors understand current market rates for similar services and helps them price their jobs competitively.

  5. How often should I update my pricing as a contractor? Updating your pricing annually or semi-annually is a good practice. However, significant market changes may require more frequent updates.