How-to
How to Price a Job: A Pricing Guide for Service Businesses
·7 min read
Pricing is the single biggest lever in your business — and the one most owners get wrong. Charge too little and you work hard for nothing; charge with no method and your quotes look random. This guide shows you how to price a job so every quote is profitable and defensible.
Start with your true hourly rate
Your hourly rate isn't "what feels right" — it's a number that has to cover far more than your time. Work it out from the top down:
- Decide your target annual income — what you actually want to earn.
- Add your overheads — vehicle, tools, insurance, software, phone, marketing, accounting.
- Subtract non-billable time — quoting, admin, travel and downtime. You can't bill every hour.
- Divide by your real billable hours — often 1,000–1,200 a year, not 2,000.
The mistake that keeps you broke
Most tradespeople divide their target income by 2,000 hours and forget overheads and unbillable time. That single error can leave your rate 40–50% too low. Always price from billable hours after costs.
Cost materials — then add markup
Materials should never go on a quote at cost. You carry the cost, the risk and the time of sourcing them, so apply a markup — commonly 10–30% depending on your trade. On a quote, that markup is normal and expected; it's not the same as your profit margin.
Fixed price vs hourly: which to use
- Fixed price (a quote) — best when you know the scope. The client gets certainty; you keep the upside if you're efficient. Most service jobs should be fixed-price.
- Hourly / day rate — best when the scope is unclear or open-ended. Protects you from underquoting, but caps your upside and makes clients nervous about the final bill.
- Day rate plus materials — a practical middle ground for variable jobs.
If you're not sure which document you're sending, read quote vs estimate vs proposal — it matters for how binding your price is.
Price for the job, not just the hours
The best pricing reflects value, not only time. A job that's urgent, high-skill, high-risk or high-stakes for the client is worth more than the raw hours suggest. Factor in difficulty, access, urgency and the cost to the client of getting it wrong. Don't be the cheapest — be the one they trust.
Worked example: pricing a painting job
- Labour: 3 days × $360 day rate = $1,080
- Materials (paint, prep, sundries) at cost $180 + 20% markup = $216
- Waste removal & access = $90
- Subtotal $1,386 — then add tax and your margin buffer
For a deeper trade-specific walkthrough, see how to quote a painting job, or explore quoting built for painters.
Keep your pricing consistent
The fastest way to look unprofessional — and to underprice by accident — is to price every job from scratch. Save your rates and common services once, and apply them automatically to every quote. Jotquote's quote generator does exactly that: it builds the itemised quote from your saved rates, so your pricing is consistent, accurate and quick.
Price every job right, in seconds
Save your rates once and let Jotquote apply them to every quote automatically. Free to start.
Start freeFrequently asked questions
How do I work out my hourly rate?
Start from your target annual income, add all your overheads, subtract non-billable time (quoting, admin, travel), then divide by your realistic billable hours — often around 1,000–1,200 a year, not 2,000. That gives a rate that actually covers your costs.
How much markup should I add on materials?
Most service businesses add 10–30% on materials to cover sourcing, handling and risk. The exact figure depends on your trade and how much work the materials involve.
Should I charge a fixed price or hourly?
Use a fixed price when the scope is clear — it gives the client certainty and rewards your efficiency. Use hourly or day rates when the scope is uncertain, so you're protected from underquoting.
