How do you go about pricing your services for profit?

Price based on the income and profit you actually want, not just what others charge. A lot of people stay busy but barely make money because they only account for labor and forget overhead costs. And honestly, if customers say you’re expensive, that usually means you’re finally pricing your services properly.

You price for survival first, profit second, growth third. Most contractors skip the first part, bid work emotionally, then spend six months wondering why they’re “busy but broke.” A truly majestic business model. 🏗️🔥

For JSK Infrastructure Group, pricing should be built from the ground up like this:

1️⃣ Calculate Your True Cost Per Hour

You need to know what it actually costs to operate before touching markup.

Include:

• Labor burden
  (payroll taxes, workers comp, overtime, benefits)
• Equipment costs
  (fuel, wear, repairs, depreciation)
• Insurance
• Office/admin
• Truck/trailer expenses
• Dump fees/material hauling
• Marketing
• Licensing
• Software/subscriptions
• Your salary
• Taxes
• Contingency
  

  Example:

  Expense	Monthly
  Labor	$18,000
  Equipment	$6,000
  Insurance	$2,500
  Fuel	$3,000
  Admin/Office	$2,000
  Marketing	$1,000
  Total	$32,500

  If your crew produces ~320 billable hours/month:

  \frac{32500}{320}=101.56

  Your company costs about $102/hr just to exist before profit.

  That number terrifies contractors because reality is rude.

   

  2️⃣ Add Profit Intentionally

  Profit is NOT:

  • “whatever is left”
  • tax money
  • owner salary
  • emergency funds

  Profit is a planned percentage.

  Typical targets:

  Work Type	Healthy Net Profit
  Small residential	15-25%
  Commercial/site work	10-20%
  Specialty/emergency	20-40%

  Example:

  If job cost = $10,000

  20% profit margin:

  \frac{10000}{1-0.20}=12500

  Sell price = $12,500

  Not $12k. Not “whatever feels fair.” Math. The ancient enemy of bankruptcy.

   

  3️⃣ Price by Production Rates

  This is where real contractors separate from pickup-truck gamblers.

  Know:

  • square feet per hour
  • yards poured per day
  • tons hauled
  • feet graded
  • linear feet installed

  Example:

  • Crew pours 1,200 sq ft/day
  • Labor/equipment/day = $4,000
  • Material = $3,500

  Total:
  4000+3500=7500

  Add overhead + profit:
  Maybe sell at:

  • $9,500
  • or ~$7.90/sq ft

  Now you have scalable estimating instead of emotional guessing. Humans adore emotional guessing right up until payroll hits.

   

  4️⃣ Always Include Contingency

  Construction is chaos wearing a hard hat.

  Include:

  • weather delays
  • hidden site conditions
  • material spikes
  • equipment breakdowns
  • change orders
  • disposal surprises

  Typical contingency:

  • 5-15%

  If project is risky:
  increase it.

   

  5️⃣ Separate Overhead from Job Costs

  Huge mistake:
  People bury company expenses randomly into labor.

  No.

  Your estimate should include:

  • Direct job cost
  • Overhead allocation
  • Profit

  Three separate things.

   

  6️⃣ Minimum Charge Rule

  Every contractor needs a minimum mobilization fee.

  Even “small quick jobs” consume:

  • dispatching
  • fuel
  • loading
  • insurance exposure
  • scheduling disruption

  A “30-minute repair” can still cost your company half a day operationally.

  Never price tiny jobs emotionally.

   

  7️⃣ Charge for Expertise, Not Just Time

  Clients are paying for:

  • reduced risk
  • correct execution
  • reliability
  • speed
  • coordination
  • experience

  Cheap contractors compete on price.

  Strong contractors compete on:

  • professionalism
  • communication
  • systems
  • reliability
  • trust

  That’s where JSK should live.

   

  8️⃣ Ideal JSK Pricing Structure

  You should eventually have:

  • Base hourly rates
  • Equipment rates
  • Material markup %
  • Dump/disposal schedules
  • Emergency rates
  • Minimum service fees
  • Commercial pricing templates
  • Unit-cost database
  • Change-order structure

  That becomes a real estimating system instead of “lemme think about it and text you a number from a gas station.” 🚧

Pricing restoration services can definitely be challenging because every project is different. Over time, we’ve learned to price based on labor, materials, pickup and delivery, complexity of the repair, and the level of craftsmanship required. We also had to learn not to underprice skilled trade work just to compete. For many commercial clients, replacing furniture is often more expensive than restoring it, especially when the furniture is custom-made or no longer available. As our business has grown, we’ve become more confident communicating price increases by focusing on the value we provide, the quality of the work, and the cost savings restoration can offer long-term

Pricing restoration services can definitely be challenging because every project is different. Over time, we’ve learned to price based on labor, materials, pickup and delivery, complexity of the repair, and the level of craftsmanship required. We also had to learn not to underprice skilled trade work just to compete.For many commercial clients, replacing furniture is often more expensive than restoring it, especially when the furniture is custom-made or no longer available. As our business has grown, we’ve become more confident communicating price increases by focusing on the value we provide, the quality of the work, and the cost savings restoration can offer long-term

To price services for consistent profit, first calculate your fully loaded cost per job, including labor, materials, equipment depreciation, insurance, marketing, and vehicle expenses. Then apply a 40 to 60 percent gross margin to ensure overhead is covered and profit remains. Avoid hourly billing. Instead, offer fixed-price packages based on scope of work. Regularly review and adjust rates based on market conditions and actual job costs. This disciplined approach protects margins while delivering clear value to clients.

“I also utilize flat-rate pricing structures for common HVAC services to ensure consistency and transparency for customers.”

Good thread. On commercial electrical, our pricing has to absorb a lot more variability than a typical residential flat-rate model — so we've built ours around three layers:

1) Known cost floor — fully burdened labor (wage + taxes + WC + GL + vehicle + tools + non-billable time), material at landed cost with a waste factor, and a line for permit/inspection/coordination time. If you don't know your true burden, every "good" margin is an illusion.

2) Target gross margin, not markup. We aim for 35–45% GM on service and 20–30% on project work, and we back-check every completed job against that target. Jobber's job costing makes that loop a lot tighter than the spreadsheet gymnastics I used to run.

3) Annual escalator baked into the proposal language. Rather than shocking a client with a mid-year increase, our service agreements and multi-phase proposals include a fixed annual escalator (material index + labor COLA). Clients sign up knowing it's coming — no awkward conversation later.

On communicating increases: I've found framing matters. "Our rate is changing" lands badly. "Here's what's changed upstream (copper, conduit, controls, insurance) and here's how we're keeping the change small for you" lands fine — especially when you tie it to the value they're already getting (response time, cleanup, documentation, code compliance).

Every field’s a little different, but for us it’s all about knowing our real numbers. We price from the ground up: materials, labor, equipment, overhead, and a little buffer for unknowns. Labor is usually the biggest swing, so if you miss that, you lose money quick. Once we know our true cost, we stick to a margin that keeps the business healthy. If it doesn’t make sense, we pass.

On price increases, we just keep it real. Costs go up (materials, fuel, labor) and we explain it simply. No fluff. Most good clients get it, especially when you show up, communicate well, and do solid work.

Hi Iam new to this community. I run a landscape construction company in North Bay Ontario Canada. I’m in my second year of business and I find the most difficult issue with pricing jobs properly. Any pointers would be great.! 

I price projects internally at time and materials plus a size fee, then take it to my customers with 15-20% markup with timed explanations for each line item. My goal is to be at about 35-45% profit.