How to Price a Job So You Actually Make Money (Markup, Margin, and Real Numbers)

If you quote work for a living, pricing is the fastest way to make money or lose it. Most owners set prices by feel, add a little to what the job "should" cost, and hope it works out. The trouble is that a gut quote leaves real money on the table every single time, and you never see it because the job still gets done and the check still clears.

This post shows you how to price a job the right way. We will cover markup versus margin, your true cost of doing the work, and how to make every job pay for your overhead. Then we will price a full sample job for a Mesa concrete contractor, from raw cost to final quote, so you can copy the steps.

Markup and Margin Are Not the Same Number

These two words get mixed up constantly, and the mix-up quietly costs you money. Markup (the amount you add on top of your cost) and margin (the share of the final price you actually keep as profit) describe the same job from two different angles.

Say a job costs you $667 to do. You add 50 percent markup, which is $333, so you charge $1,000. That feels like a healthy 50 percent. But look at the margin. Your profit is $333 out of a $1,000 price, which is only 33 percent. So a 50 percent markup is really a 33 percent margin. If you thought you were keeping half, you were off by a lot.

Pick one word and stick with it. Most owners should price to a target margin, because margin is what pays your bills and your salary.

Find Your True Cost of Doing the Work

You cannot mark up a cost you have not measured. Your true cost has three parts: labor, materials, and a share of overhead.

Labor burden is bigger than the wage

Labor burden means everything you pay to keep a worker on the job, not just the hourly wage. Add payroll taxes (the Social Security, Medicare, and unemployment taxes an employer owes, roughly 10 to 12 percent of wages), workers comp and liability insurance, and paid downtime like drive time, loading, and slow days. A tech you pay $25 an hour usually costs you $33 to $36 for every hour of real work. If you bid at $25, you are losing money before the truck leaves the yard.

Materials plus the waste nobody budgets

Count your materials, then add a waste factor (the extra you buy that ends up as scrap, offcuts, or spillage). For most trades that is 5 to 15 percent. Concrete overpours, lumber gets miscut, and a Gilbert cabinet shop tosses damaged panels. Budget for it or it eats your profit.

Make Every Job Carry Its Share of Overhead

Overhead is your always-on cost of being in business: shop or yard rent, general liability insurance, truck payment and fuel, software, phone, and the hours you spend on quotes, invoices, and email. That time is real even though no customer pays for it directly.

Add up your monthly overhead. Say it comes to $9,000. Now divide by your billable hours, meaning the hours you actually sell to customers in a month. If your crew bills 300 hours, then $9,000 divided by 300 is $30. Every hour you sell has to carry $30 of overhead before you earn a dime of profit. Build that number into every quote.

Price a Real Job From Start to Finish

Let us price a 400 square foot backyard patio for a Mesa concrete contractor.

• Labor: 32 hours at a burdened cost of $34 an hour is $1,088.
• Materials: concrete, rebar, gravel, and forms at $900, plus a 10 percent waste factor of $90, is $990.
• Overhead: 32 billable hours at $30 an hour is $960.
• True cost of the job: $1,088 plus $990 plus $960 is $3,038.

Now add your target margin. To keep 35 percent, you divide the cost by 0.65 (that is 1 minus 0.35). So $3,038 divided by 0.65 is about $4,675. That is your quote.

Here is the painful part. The gut quote on this same patio is usually around $3,500, because the owner eyeballs materials, forgets burden, and never charges for overhead. The calculated quote is $4,675. That is a gap of about $1,175 on one patio. Run 40 jobs a year like that and you just handed away roughly $47,000, which is likely more than the profit you took home.

How to Raise Prices Without Losing Your Customers

If your numbers say you are too low, raise prices with a plan instead of an apology. Raise on new quotes first, starting today. Move existing agreements up at their natural renewal or the next job, not mid-project.

The math is friendlier than your nerves. At a typical 30 to 40 percent margin, a 10 percent price increase means you could lose roughly 1 in 5 jobs and still make the same or more total profit, because the jobs you keep each earn more. You are not chasing volume, you are chasing profit.

Know Your Numbers Before the Next Quote

All of this only works if your cost data is real. Burden rates, material waste, and overhead per hour come straight out of clean, current books (financial records that are categorized correctly and up to date). If your books are a mess, you are just guessing with extra steps. Getting there is the same discipline we cover in our simple monthly bookkeeping routine, and it is also why a "profitable" business can still run out of cash.

Doing this right every month, on every quote, takes time, discipline, and a little know-how that most owners would rather spend running the crew and landing the next job. That is exactly what GGS does for you. We keep the books clean, build your true costs, and hand you pricing you can trust. If you would rather see it done than do it yourself, that is our whole job. You can learn more about our done-for-you bookkeeping and CFO help, or start with a look at your own numbers.

A Free Profit Review walks through your actual margins, job by job, and usually finds money in the first hour. Call or text (480) 430-2772 to set it up.