Contractor pricing guide: how to charge for your work
The trades are priced with math, not gut feeling. This guide covers the three pricing methods contractors actually use, the formula for setting your hourly rate, materials markup by trade, and the minimums that keep small jobs profitable.
The three pricing methods
| Method | How it works | Use it when |
|---|---|---|
| Time and materials (T&M) | Bill actual hours at a shop rate plus marked-up materials | Open-ended repairs, troubleshooting, custom work, change orders |
| Flat rate | One fixed price for a defined scope | Standard service calls, installs, and jobs your crew does efficiently |
| Cost-plus | Actual cost plus an agreed fee or percentage | Large commercial and renovation contracts with variable conditions |
Most contractors mix methods. Flat rate wins the quoted service call; T&M protects the hour-long job that turns into a four-hour discovery. Cost-plus belongs on big projects where neither side can predict conditions.
How to set your hourly rate
- Calculate your fully loaded cost. Your hourly cost is wages plus payroll taxes, insurance, vehicle, tools, licensing, and a share of overhead. Owner-operators routinely underestimate this number — a $25-per-hour take-home can cost $40 per hour on the books.
- Apply a 2.5 to 3 multiplier. Multiply your loaded cost by 2.5 to 3 to cover overhead and profit. At a $40 loaded cost, that yields a $100 to $120 shop rate.
- Benchmark locally. Handyman work typically bills $75 to $110 an hour; licensed electrical, plumbing, and HVAC runs $110 to $165 in most US markets; specialty and licensed engineering work goes higher.
- Test and adjust. If your calendar is full, your rate is probably low. If you keep losing quotes to competitors, check whether your scope is tighter or your overhead is heavier — then adjust with intent, not panic.
Marking up materials by trade
Materials markup is how contractors get paid for procurement, delivery, storage, financing, and warranty risk. The range depends on the trade and whether materials are bulk or specialized.
| Trade | Typical markup |
|---|---|
| Electrical, HVAC, plumbing parts and fixtures | 15–30% |
| Roofing, siding, flooring bulk materials | 10–20% |
| Custom fabrication and millwork | 20–40% |
| Pass-through at cost | Only with an explicit management fee |
State the markup on the quote and the invoice. When clients see "materials — cost plus 15 percent" they trust the number; hidden markups are how jobs end in disputes. The free contractor invoice template separates labor, materials, and markup lines so your pricing logic is visible.
Minimums, trip fees, and small jobs
A two-hour drive for a thirty-minute job is a losing day. The fix is a pricing floor: a trip fee of $75 to $150 for jobs outside your normal radius, or a two-hour minimum on small service calls. Put the floor on the quote in writing — a stated minimum reads as professional, an after-the-fact charge reads as a surprise.
For recurring maintenance contracts, quote a monthly or annual block rather than per-visit pricing. A block smooths your revenue and makes the client's budget predictable.
When to raise your rates
Raise rates when you are booked out more than two weeks, when material costs have moved, or when a competitor's price would be impossible at your current rate. A 5 to 10 percent annual increase is normal and rarely loses loyal clients. Announce it in writing 30 to 60 days ahead, apply it to new quotes immediately, and grandfather active projects so the increase lands on renewals, not disputes.
Once the rate is set, the invoice has to carry it cleanly. QuickBooks tracks job cost, materials, and labor for contractors that want accurate margins, while Jobber handles quotes, deposits, and milestone invoices for the field side.
Contractor pricing FAQ
How much should a contractor charge per hour?
Take your fully loaded cost per hour and multiply by 2.5 to 3. At a $40 loaded cost, bill $100 to $120. Market ranges run $75 for handyman work to $150 or more for licensed electrical, plumbing, and HVAC.
What is the standard markup on materials for contractors?
Ten to 30 percent depending on trade and job size — 15 to 30 percent for electrical, HVAC, and plumbing parts, 10 to 20 percent for bulk materials. It covers procurement, delivery, financing, and warranty risk.
Should I charge a flat rate or time and materials?
T&M protects you on unpredictable jobs; flat rate wins defined work where your process is efficient. Many contractors use flat rate for standard calls and T&M for custom or large work.
When should a contractor charge a trip fee or minimum?
Whenever a job cannot cover travel and overhead — a $75 to $150 trip fee or a two-hour minimum on small service calls. State it in the quote so it reads as professional.