How to price a job (UK): the costs small contractors forget, with a checklist

You won the job. Then the skip, the parking and the extra day of making good came out of your own pocket.

Here's how to price a job properly. Add up every cost the job will create, not just materials and labour.

Then add a share of your overheads and a profit on top. Most lost money hides in the small costs that never made it onto the sheet.

In short

• A price has four parts: direct costs, site costs (prelims), overheads and profit.
• The costs people forget are waste, travel, access, skips, making good, snagging and the time spent quoting.
• Your true labour cost is much more than the wage. Holidays, employer National Insurance and pension all add to it.
• Keep a contingency separate from profit, so a bad day doesn't wipe out your margin.
• Run every price through the same checklist before it goes out.

How can a small contractor avoid missing costs when pricing a job?

A small contractor avoids missing costs by pricing from a written checklist, not from memory. Use the same list on every job, so nothing depends on how tired you are that evening.

The method is simple:

1. Visit the site, or get photos and measurements you trust.
2. Measure the quantities (a takeoff, which means measuring the quantities off the drawings or the site).
3. Price materials from a current merchant quote, not last year's invoice.
4. Work out labour in days, using your real cost per day.
5. Go down the forgotten costs list below, line by line.
6. Add overheads, contingency and profit as separate lines.
7. Check the total against a similar job you've done.

The checklist does the remembering, so you don't have to.

What goes into the price of a job?

The price of a job is made up of direct costs, site costs, overheads and profit. Miss any one of the four and you're working for less than you think.

Prelims (preliminaries) are the costs of setting up and running the site, rather than doing the work itself. On a small domestic job they're easy to forget, because nobody writes them on a drawing.

Overheads are the costs you pay whether you're on a job or not. Every price has to pay its share of them.

Which costs do small contractors forget most?

Small contractors most often forget the costs that happen around the work: waste, travel, access, clearing up and the return visit. Each one looks small, but together they can be a big slice of the job.

Making good means tidying and repairing after the main work, like filling holes and patching plaster. Snagging is the list of small faults you fix before handover.

If a cost will happen, it goes on the price, even if it's small.

How do you work out a true labour rate?

You work out a true labour rate by adding everything an employee costs you in a year, then dividing by the days they actually work. The wage alone is always too low.

As of the 2026 to 2027 tax year, three costs sit on top of the wage:

• Holiday: a worker on a 5-day week is entitled to at least 28 days of paid holiday a year. Employers can count bank holidays as part of that.
• Employer National Insurance: for most employees, you pay 15 per cent on earnings above 5,000 pounds a year.
• Pension: under automatic enrolment, you pay at least 3 per cent of qualifying earnings. That means earnings between 6,240 pounds and 50,270 pounds a year.

Here's a worked example for one employee. The wage and lost days are made up to show the method.

Divide the wage by 260 days and you get about 123 pounds a day. That's about 44 pounds a day short, on every day of every job.

This doesn't include the van, tools, workwear or insurance. Those go in your overheads.

How do you allow for waste, travel and access?

You allow for waste, travel and access by giving each one its own line on your price. If it's buried in a round number, you can't check it later.

Waste. Add a waste allowance to each material, based on what you really throw away. Tiles with lots of cuts waste more than a plain run of plasterboard.

Travel. Price the van's miles, any tolls and parking for every day on site. A job across town can cost an hour of each day in traffic.

Access. Check how you'll reach the work. A tower, a cherry picker or a scaffold all cost money to hire and time to put up.

Skips. In England and Wales, a skip on a public road needs a licence from the local council. In most areas the skip hire firm gets it, but in some you have to apply yourself. Check who pays before you price.

What's the difference between overheads, contingency and profit?

Overheads pay for your business, contingency pays for what goes wrong, and profit is what's left. Keep them as 3 separate lines.

• Overheads are the costs of running the firm: van, fuel, insurance, phone, software, accountant and your own office time. Add up a year of them, then work out what share each job should carry.
• Contingency is money set aside for risk on this job, such as hidden rot or old wiring behind a wall.
• Profit is your reward for taking the job on. It also pays for the quiet months and new kit.

If the contingency gets used, your profit should still be there. That's why they're never the same line.

If you're VAT registered, say clearly whether your price includes VAT. You must register for VAT once your taxable turnover for the last 12 months goes over 90,000 pounds.

What does a fully priced job look like?

A fully priced job lists every cost, so you can see where the money goes.

Here's a worked example for a bathroom refit. The figures are made up to show the method, not market prices.

Say you price the first pass at 4,600 pounds, adding 15 per cent profit on 4,000 pounds. The job really costs 5,230 pounds, so you lose 630 pounds on it.

Add the same 15 per cent to the full cost and the price comes to about 6,015 pounds. Now the job pays you.

None of the missing lines looks big on its own. That's exactly why they get left off.

What should you check before you send the price?

When you work out how to price a job, finish with this list before you send anything. Don't send it until every line is done.

If the job comes with drawings and a bill, our guide to the bill of quantities template shows how to check each line.

Where Nexley fits

Nexley is AI software for UK tradespeople and small construction firms that prices tenders, measures take-offs and writes quotes. It also runs the back office through WhatsApp, linked to Xero, QuickBooks and Sage.

Nexley prices from your own list: your rates, your materials and your standard descriptions. On a tender, it prices the bill from your own labour and material rates, not a generic price book. The result is ready for your review before anything is submitted. See how quoting software for builders works, or try it free for 7 days.

Common questions

Can construction estimating software use my own labour and material rates?

Yes, and you should pick one that does. A price built on a generic price book won't match your merchant, your gang or your area.

Load your own rates, then check the first few jobs against prices you've done by hand. Our guide to construction estimating software covers what else to look for.

How do I price a job I've never done before?

Break it into tasks you have done before, and price each one. Get written prices from any subbie or supplier you'll need.

Then add a bigger contingency than usual, because you'll be slower the first time. If the risk is too high to price, say so, or price that part as dayworks (paid by the hour plus materials).

Should I charge for a quote?

Most small domestic quotes are free, but your quoting time is still a cost. Spread it across the jobs you win, as part of your overheads. For big jobs that need drawings or design, some firms charge a fee. They take it off the price if they win the work.

How much profit should I add to a job?

There's no set figure. It depends on your overheads, the risk on the job and how much work you've got on. Work out your overheads first, so you know the profit is real money and not just paying the bills.

Price riskier jobs higher, and never let profit cover the contingency.

Sources

This page is general guidance, not financial or tax advice. Rates are as of October 2026. Check your own figures with your accountant.

• Rates and thresholds for employers 2026 to 2027 (GOV.UK) (gov.uk)
• Holiday entitlement (GOV.UK) (gov.uk)
• Workplace pensions: what you, your employer and the government pay (GOV.UK) (gov.uk)
• Skip licence, England and Wales (GOV.UK) (gov.uk)
• Register for VAT (GOV.UK) (gov.uk)