Job Pricing Calculator for Contractors
By BRIX Editorial Team · Updated
To price a job, add up direct costs (labor hours × burdened labor rate, plus materials and other job costs), then divide by 1 minus your overhead percentage and target profit percentage. A job with $1,500 of direct cost, 28% overhead and a 12% profit target should be quoted at $2,500.
- Labor cost
- $270
- Total direct cost
- $1,500
- Covers overhead
- $700
- Net profit
- $300
- Gross margin
- 40.0%
- Markup on job cost
- 66.7%
- Effective labor rate billed
- $212/hr
Quote $2,500. That pays $1,500 of job costs and $700 toward overhead, and leaves $300 profit. If you discount, every dollar off comes straight out of that $300.
Key takeaways
- Price = direct job cost ÷ (1 − overhead % − profit %), with overhead and profit as shares of revenue.
- Use burdened labor cost (wage plus taxes, comp, benefits, PTO), not the wage, for labor hours.
- Overhead % comes from your own P&L: last year's overhead ÷ last year's revenue.
- Adding overhead % and profit % to cost as a markup under-prices the job. On this example it costs $400.
How do you price a contracting job?
You price a job by working out what it costs you to do, then setting a price that covers that cost, pays its share of your overhead and leaves the profit you planned. Every job has to carry part of the rent, trucks, office wages and insurance, or the year ends with a busy calendar and no money.
Price = (L × R + M + D) ÷ (1 − O − P)
- L
- labor hours for the whole crew
- R
- burdened labor cost per hour
- M
- materials and parts at your cost
- D
- other direct costs: permits, disposal, rentals, subs
- O
- overhead as a share of revenue (decimal)
- P
- target net profit as a share of revenue (decimal)
How to price a job, step by step
- 1
Estimate labor hours for the whole crew.
Two techs for three hours is six labor hours. Include drive time to the job, setup, cleanup and the parts run you know will happen.
- 2
Multiply by your burdened labor cost.
Burdened cost is the wage plus employer payroll taxes, workers' comp, benefits and paid time off. The labor burden calculator works it out from the wage.
- 3
Add materials and other direct costs at your cost.
Use what you actually pay the supplier, plus permits, disposal fees, equipment rental and any subcontractor. Don't mark these up yet.
- 4
Find your overhead percentage.
Divide last year's overhead (everything that isn't a job cost) by last year's revenue. The overhead rate calculator walks through what counts.
- 5
Pick a net profit target and divide.
Price = direct cost ÷ (1 − overhead % − profit %). Round to a clean number and check it against what the market will bear.
Why you divide instead of adding a markup
Overhead and profit are budgeted as shares of the price, not of the cost. If you add 28% + 12% = 40% to the $1,500 cost, you quote $2,100. Take out 28% of that price for overhead ($588) and only $12 is left, a 0.6% net margin instead of 12%. Dividing fixes it. See markup vs. margin.
Job pricing examples by trade
The same formula prices a two-hour repair and a two-week reroof. What changes is the mix: roofing is crew-hours and materials heavy, cleaning is almost all labor, HVAC and electrical carry expensive equipment. These are example inputs you can load in the calculator, not industry benchmarks.
| Trade | Job | Labor | Materials + other | Overhead / profit | Price | Gross margin |
|---|---|---|---|---|---|---|
| Plumbing | 50-gal gas water heater swap | 6 hrs × $45 | $1,230 | 28% / 12% | $2,500 | 40% |
| HVAC | Condenser replacement, 3-ton | 10 hrs × $48 | $3,350 | 30% / 12% | $6,603 | 42% |
| Electrical | 200-amp panel upgrade | 12 hrs × $50 | $1,350 | 30% / 12% | $3,362 | 42% |
| Roofing | Tear-off and reroof, 25 squares | 96 hrs × $38 | $5,700 | 20% / 10% | $13,354 | 30% |
| Landscaping | Front bed install with plants and mulch | 16 hrs × $27 | $680 | 25% / 12% | $1,765 | 37% |
| Cleaning | Move-out deep clean, 3-bed house | 8 hrs × $24 | $40 | 25% / 10% | $357 | 35% |
Flat rate, time and materials, or fixed bid?
The formula works for any pricing method. For time and materials, the divisor tells you what hourly rate and parts markup you need. For a fixed bid, it's the price. For service work, flat-rate pricing turns it into a menu price per task, so the customer sees one number before you start and you keep the upside when your techs are fast.
Common job pricing mistakes
- Pricing labor at the wage. A $30 wage can cost $40 or more an hour once taxes, comp, benefits and PTO are added.
- Forgetting the hours you can't bill. Drive time, supply-house runs, callbacks and estimates are real hours. Build them into the job or into your hourly rate.
- Copying a competitor's price. Their overhead isn't yours. A one-truck shop and a ten-truck shop with an office can't charge the same and both profit.
- Using an overhead % from years ago. Insurance, fuel and software costs move. Recalculate overhead every year, or every quarter while you're growing.
- Never checking the result. Compare estimated to actual cost on finished jobs with the job costing calculator. That's how you learn which jobs make money.
For the full playbook, including good-better-best options and how to raise prices, read how to price jobs.
Frequently asked questions
What is the formula for pricing a job?
Price = (labor hours × burdened labor rate + materials + other direct costs) ÷ (1 − overhead % − profit %). Overhead and profit are entered as shares of revenue, the way your P&L reports them.
What percentage should I add for overhead and profit?
Use your own overhead percentage from last year's books, not a rule of thumb. The old 10 and 10 rule (10% overhead plus 10% profit) under-prices most service businesses, whose overhead is often well above 10% of revenue. Calculate yours, then choose a profit target on top.
Should I mark up materials separately?
You can, but the job still has to hit the total price the formula gives. Many shops mark up parts and price labor separately on the invoice. Just make sure the two together cover direct cost, overhead and profit, and check with the markup and margin calculator.
How do I price a job when I don't know how long it will take?
Estimate from similar past jobs, then add a contingency for the unknowns you can name: old wiring, rotten decking, seized fittings. If the risk is large, quote time and materials or put an allowance and change-order clause in the contract.
What gross margin should a contractor aim for?
Gross margin has to be at least your overhead percentage plus your net profit target. A shop with 28% overhead that wants 12% profit needs about a 40% gross margin on every job. Set your target from your numbers, not an industry average.
How is job pricing different for residential and commercial work?
Commercial bids usually face more competition, retainage and slower payment, so margins tend to be thinner and you need to price in the cost of waiting to get paid. Residential service work carries more drive time and smaller tickets, so overhead per job is higher.
Related
- How to Price Contracting Jobs for Profit: The Complete GuideHow to price trades jobs: true labor cost, overhead per billable hour, profit margin, materials markup and flat rates, with worked numbers.
- Markup and Margin CalculatorConvert markup to margin and margin to markup, or find both from cost and price. Free calculator with a markup-to-margin chart and trade examples.
- Labor Burden CalculatorCalculate labor burden with 2026 payroll tax rates, workers' comp, benefits, PTO and unbillable time. See an employee's true cost per billable hour.
- Overhead Rate CalculatorCalculate your overhead rate as a % of revenue, % of direct labor and $ per billable hour. See what to count as overhead and how to price it into jobs.
- Flat Rate Pricing CalculatorSet flat-rate prices for service tasks: book hours × selling rate plus marked-up parts. See your margin, and what you earn when a job runs long or short.
- How Much to Charge per Hour as a ContractorHow much to charge per hour as a contractor: build your rate from wage, labor burden, overhead, billable hours and profit. Free calculator with examples.
- Job Costing CalculatorCompare estimated and actual job costs line by line. See your real gross margin, which costs ran over, and how much profit fade cost you on the job.
- What Is Cost Plus Pricing?Cost plus pricing bills actual job costs plus a fee. Compare percentage and fixed fees, see what counts as cost, and when cost plus beats a fixed bid.
- What Is Good-Better-Best Pricing?Good-better-best pricing gives customers three options on one estimate. How to build tiers that differ in value, price each to a margin, and present them.
- Maintenance Agreement Pricing CalculatorPrice HVAC, plumbing, pest control and lawn care maintenance agreements from your real costs. Get yearly and monthly prices, margin and tech hours needed.