How do contractors price jobs based on actual business costs instead of competitor rates?
We run a contracting business in Juneau, Alaska. It’s a remote town with no roads in or out, so our market does not work like most places.
Lead generation is not our problem. The work is there. Our bigger challenge is filtering demand, choosing the right jobs, and pricing from the actual cost of running the business instead of just asking, “what does everyone else charge?”
That has changed how we look at pricing.
Two companies can do the same job with completely different numbers behind it: equipment payments, fuel, insurance, payroll, repairs, debt, admin time, material costs, disposal, taxes, and risk. Competitor pricing matters, but only to a point. If our cost structure is different, their price can’t be our whole pricing strategy.
We have a CPA and bookkeeper we trust, so the books are not something we’re guessing on. What we’re working on now is turning the P&L and balance sheet into real-world pricing decisions: what the equipment needs to bill, what materials need to carry, what minimums make sense, and which jobs are actually worth putting on the schedule.
We’ve also been using AI to organize that information into pricing structures, quote templates, equipment rates, per-ton pricing, material pricing, and job-type frameworks.
To be clear, we’re not using AI to tell us what to charge. We’re using it to organize what we already know, pressure-test assumptions, run simulations, and find holes before they show up in the bank account.
The more we work through it, the more we wonder how often underpricing comes from not having a clear link between pricing and the actual cost of running the business.
Curious how others think about this.
- When you price work, do you start with your own numbers first, the market first, or a mix of both?
- For those using AI, have you used it for pricing, estimating, job costing, or financial review beyond emails and marketing content?
