How to price a service job so it actually makes money
6 min read · Updated 2026-10-08
Pricing by feel works until a job runs long or materials jump. A repeatable method takes ten minutes and protects your margin. Here is the one the pricing calculator uses, step by step.
Step 1: Direct costs
Estimate the hours the job will take and multiply by the real cost of an hour of labour: wages plus the on-costs you pay, or your own target hourly pay if you work alone. Add the materials. Together these are your direct costs.
Step 2: Overhead
Your vehicle, insurance, tools, phone and software still have to be paid for. Add a percentage of the direct costs to cover them. To find your percentage, divide a year of overheads by a year of direct costs. If you do not know it yet, use your best honest figure and refine it as you learn.
Step 3: Margin
Margin is what you keep after covering all costs, and it pays for growth, slow months and risk. Divide your total cost by (1 − target margin) to get the price.
Worked example
Charging 264.50 plus a rough 30% (about 343.85) would have left you with a margin of only about 23%. The method matters.
- 6 hours of labour at 25 cost per hour = 150
- Materials = 80, so direct costs = 230
- Overhead of 15% on 230 = 34.50, so total cost = 264.50
- Target margin 30%: price = 264.50 ÷ 0.7 = 377.86
- Profit = 377.86 − 264.50 = 113.36
Sense-check and adjust
Compare the result with the market. If it is far above what customers expect, look at the hours and the overhead rather than just cutting margin. After each job, compare the estimate with what happened and update your assumptions. In BusinessPilotOS you can see what each job actually earned: profit is the invoiced amount minus the expenses linked to it.
Frequently asked questions
Should I charge by the hour or by the job?
A fixed price is easier for customers to accept; an hourly rate protects you when scope is uncertain. Many businesses quote fixed prices built from an hourly cost, as in this method.
How do I choose a margin?
Base it on what your business needs after overheads and what the market bears. Start with the free calculators to see what different margins mean in money.
What if the job runs over?
Record the real hours and costs, then use them to correct the next quote. Say in your quote what would count as extra work.
Put it into practice
BusinessPilotOS connects quotes, jobs, invoices, payments and costs, so the numbers in this guide come straight from your own records.