You can be the busiest contractor in town and still struggle to pay yourself.
One common reason is simple: the business is pricing jobs based on what feels competitive instead of what it actually costs to deliver the work.
A profitable price starts with knowing your numbers.
Start with direct job costs
Estimate the labor hours required and use a fully burdened labor cost, not just the employee's hourly wage. Include applicable payroll taxes, benefits, workers' compensation, and other labor-related costs. Add materials, subcontractors, equipment, disposal, permits, travel, and any other costs directly tied to the job.
Build an allowance for known uncertainty where appropriate. A rushed estimate that ignores realistic conditions can turn a good-looking sale into a loss.
Understand overhead
Rent, office payroll, insurance, vehicles, software, marketing, and other operating expenses must be covered by the work you sell. Choose a consistent method for allocating overhead across jobs or revenue. No single allocation method fits every company, but ignoring overhead entirely is not an option.
Know the difference between markup and margin
This is where pricing gets confusing.
Suppose a job costs $800 in direct costs and allocated overhead. If you mark up that cost by 25%, the price is $1,000 and the $200 profit is a 20% margin on sales.
If you want a 25% margin, the calculation is price = cost ÷ (1 − margin). In this example, $800 ÷ 0.75 = approximately $1,066.67.
These are simplified examples, but the distinction matters. Markup and margin are not the same number.
Check the market without copying it
Your costs establish what you need. The market helps establish what customers may be willing to pay. Consider service quality, speed, expertise, warranties, reliability, and customer experience. If the market will not support a price that covers your costs and target return, rethink the service model rather than pretending the math will change.
Track estimated versus actual performance
After each job, compare estimated labor, materials, subcontractors, and other costs with actuals. Identify why jobs ran over or under. Adjust your estimating templates, training, or processes accordingly.
Also review your close rate. A higher price can improve margin per job but may reduce the number of jobs won. The goal is not the highest possible quote; it is a sustainable combination of price, demand, capacity, and profit.
Put guardrails around discounting
If every salesperson can discount without limits, your carefully built pricing model may disappear at the point of sale. Set approval thresholds and explain what discounts do to contribution. Offer scope options when appropriate instead of quietly removing margin.
A better pricing habit
Create a standard worksheet, update cost assumptions regularly, review job profitability monthly, and train anyone who prepares quotes. A good system is repeatable, understandable, and informed by actual results.
The Quitter Method is about quitting guesswork and replacing it with a business that operates on clear information.
You don't need to win every job. You need to win the right work at a price your business can sustain.