How to price a job properly: labour, materials, plant and overhead

Far more than the wage. Take an employed carpenter on £22 an hour and work out what the business pays for each hour they are actually productive on site.

• Gross pay. £22 an hour, and holiday pay is paid on top of worked hours — the statutory minimum is 5.6 weeks, capped at 28 days for a five-day week. For irregular-hours and part-year workers, accrual at 12.07% of hours worked is the standard method.
• Employer’s National Insurance. 15% on earnings above the £5,000 secondary threshold in 2026/27, subject to the Employment Allowance where you qualify.
• Pension. Auto-enrolment minimum employer contribution of 3% of qualifying earnings.
• Non-productive time. Travel between sites, loading, merchant runs, training, toolbox talks, sick leave, waiting for other trades. This is normally the largest adjustment of all.
• Training, PPE, tools and certification. CSCS renewals, IPAF, PASMA, first aid, and the annual replacement of hand tools.
• Employer’s liability insurance, which is compulsory, and public liability.
• The CITB levy where you are in scope. The 2026–29 proposals keep the rates at 0.35% of PAYE and 1.25% of net paid taxable CIS subcontractor payments, with no levy below £150,000 of combined payroll and CIS payments, and a 50% reduction up to £500,000.

Productive hours, not paid hours, are what you divide by. An operative paid for 2,000 hours a year who is productive for 1,600 costs 25% more per productive hour than the payroll suggests.

Work out your own number once a year from real payroll data, and use it. A charge-out rate copied from what the firm down the road charges is not a costing method.

1. 01Take off quantities from the drawings or a measured survey. Do not eyeball it.
2. 02Get current prices, not last quarter’s. Ask the merchant to hold the price for the quote validity period.
3. 03Add a waste allowance. Typically 5% for boarding and sheet goods, up to 10% for tiling, cut timber and blockwork, and more where the geometry is awkward.
4. 04Add delivery, and skip or waste transfer costs — which need a waste transfer note in any case.
5. 05Add a percentage for handling and storage if you are buying the materials rather than the client.
6. 06Decide the mark-up separately from your margin, and be explicit about it.

NoteWhere CIS applies to a subcontract, the direct cost of materials is excluded from the deduction base. That is a tax calculation, not a pricing one — see how CIS deductions are calculated.

Plant is straightforward if you hire — the hire rate, delivery and collection, fuel, and the idle days at weekends when it is on site but not working. If you own it, use an internal hire rate that recovers purchase, servicing, LOLER thorough examination and eventual replacement, rather than treating owned plant as free.

Preliminaries are the costs of running the site rather than doing the work, and on small jobs they are almost always underpriced because they are invisible.

• Site set-up, welfare facilities and security — all required under CDM 2015 regardless of size
• Scaffolding, temporary works and access equipment
• Supervision and site management time
• Skips, waste transfer and cleaning down
• Parking, permits, congestion or clean air charges
• Temporary power and water
• Protection of finished work and existing surfaces
• Contract-specific insurance and any bond or warranty requirement

Two days of supervision on a two-week job is 20% of a working fortnight. If it is not in the price, it is out of your margin.

Overhead is everything the business costs that is not attributable to a single job — office rent, vehicles, accountancy, software, insurance, marketing, the estimator’s time, the phone bill, the director’s salary. It has to be recovered across the jobs you win, and the only way to do that is to know the annual number.

1. 01Total your annual overhead from last year’s accounts, adjusted for what you know has changed.
2. 02Total your expected productive labour hours for the year across the whole business.
3. 03Divide. That is your overhead recovery per productive hour.
4. 04Add it to every hour you price, on every job.

A firm with £96,000 of annual overhead and 4,800 productive hours has to recover £20 for every productive hour it sells. Not roughly, and not on the big jobs only. If you win less work than you planned, the recovery per hour rises — which is why a quiet year is dangerous even when every individual job looked profitable.

Margin is what is left after overhead has been recovered. If overhead was never in the cost, your margin is your overhead.

A ten-day refurbishment, two operatives, using illustrative figures.

The instructive line is the overhead. A firm pricing the same job at cost plus 20% would quote £12,638 — nearly £3,200 less — and would consider it a profitable job while making an actual loss of about £1,100 once the year’s overhead is allocated. That is how busy firms go under.

NoteDo not confuse margin with mark-up. A 15% margin on a £15,792 price is £2,369 of the price; a 15% mark-up on £13,732 of cost is £2,060. Pick one convention and state it in your own paperwork.

• Risk. Unknown ground, an occupied building, a listed structure, a client with a history of changing their mind. Price it as a contingency line or decline the risk explicitly in the exclusions.
• Retention. Money held for up to eighteen months has a financing cost. See retention and how to get it released.
• Payment terms. Sixty-day terms on a job you fund up front are a real cost. Price them or negotiate them.
• Liquidated damages, where the contract has them, and whether the programme is achievable.
• Inflation, on anything with a long lead-in or a fixed price over more than a few months.
• Warranty and defects liability obligations you are taking on after completion.

And write the exclusions down. Most disputes about price are actually disputes about scope, and a quote that lists what is not included is worth more than one that lists what is.

Estimating and quoting with line items, quantities and VAT are on every plan from Solo at £29 a month. Quotes convert to jobs, so the price you quoted and the job you deliver are the same record.

The part that closes the loop is job costing. The Job Costing module at £25 a month — included from Pro at £249 a month — builds a live cost position for each job from the cost ledger, timesheet hours and purchase orders as they are receipted, splits it across labour, materials, plant, subcontractors and the rest, and reconciles it against certified value. That is what tells you whether the £34 an hour you priced at is the £34 an hour you are actually paying.

What Estimark does not do is calculate your overhead recovery rate or set your labour rate. Those come from your accounts. See job costing and CVR and Estimark for builders and contractors.