Pricing a building job comes down to seven numbers: labour, materials, plant and hire, subcontractors, overheads, contingency and profit. Add them up in that order, add VAT if you’re registered, and you’ve got a price you can stand behind. Most bad prices aren’t bad maths. They’re a line that got missed.
Here’s a simple method, a worked example, and the free calculators on our tools page that do the fiddly sums for you.
1. Break the job into pieces
Before any numbers, list the work. Strip out, groundworks, brickwork to DPC, up to plate, roof, first fix, plastering, second fix, making good. The smaller the pieces, the less you’ll forget.
If you’ve got drawings, measure from the current revision, not the one on the dashboard of the van. A quote priced off an old drawing is a quote for a different job.
2. Labour: days times rates
For each piece of work, ask how many days it will take and who’s doing it. Then multiply by their day rate.
If you only know someone’s hourly rate, or you need to turn a yearly figure into a day rate, our day rate calculator converts between hourly, daily, weekly and yearly rates based on the hours and days actually worked.
Be honest about days. Weather, waiting on deliveries and a bit of travel all eat into the week. If you always come in a day over, price the extra day in.
3. Materials, with a waste allowance
Price the materials from your merchant’s current prices, not last year’s. Then add a waste allowance for cuts, breakages and the odd pallet that gets damaged. The right figure depends on the material and the job, so use what your own past jobs tell you.
Don’t forget the small stuff: ties, DPC, fixings, sealant, sundries. On their own they’re nothing. Across a job they add up.
4. Plant, hire and skips
Scaffold, mixers, a digger, a skip or two, welfare units, fencing. Price them for how long you’ll actually need them, plus delivery and collection.
5. Subcontractors
Get proper quotes from your subbies and drop them in as they are. If you’re the main contractor paying subbies under CIS, the deduction doesn’t change your price, but it does change what you pay out and when. Our CIS calculator shows what comes off a payment at 20%, 30% or gross payment status.
6. Overheads
This is the one most small firms underprice. The van, fuel, insurance, your phone, accountant, software and the hours you spend pricing jobs you don’t win. None of it belongs to one job, so it has to be spread across all of them. A common way is to add a percentage to your job costs, worked out from what your overheads cost you over a year.
7. Contingency and profit
Contingency covers the unknowns: the soft spot in the trench, the rotten joist behind the plasterboard. Profit is what the business earns for the risk of doing the job. They’re not the same thing, so keep them as separate lines.
A worked example
Here’s a small job, two bricklayers and a labourer for four days:
| Line | Working | Amount (£) |
|---|---|---|
| Bricklayers | 2 people × 4 days × 220 a day | 1,760.00 |
| Labourer | 4 days × 150 a day | 600.00 |
| Materials | Including a waste allowance | 1,400.00 |
| Skip | One 8 yard skip | 300.00 |
| Job costs | 4,060.00 | |
| Overheads | 10% of job costs | 406.00 |
| Contingency | 5% | 223.30 |
| Total cost | 4,689.30 | |
| Profit | 15% markup | 703.40 |
| Price ex VAT | 5,392.70 | |
| VAT | 20%, if you’re registered | 1,078.54 |
| Price inc. VAT | 6,471.24 |
Day rates are what you pay your team; VAT only comes in on the price you charge the customer. The rates and percentages are examples, not recommendations, so use your own.
Check your price against what really happened
The best way to price the next job better is to know what the last one actually cost. Most firms never find out, because the hours are on scraps of paper and the materials were ordered by text.
In Banksman, your team logs their hours against the site on the day, price work and daywork are kept separate, and every material request is tracked from approval to delivery. At the end of the job you can see the hours and orders that went into it, and price the next one with real numbers. If you’re weighing up daywork against a fixed price, our guide to daywork vs price work covers how to record each one.
Start with the free calculators on the tools page, and when you want the hours and orders on record too, try the live demo.
FAQ
What's the difference between markup and margin?
Markup is profit as a percentage of your costs. Margin is profit as a percentage of the price. A 15% markup adds 15 on every 100 of cost, which works out at about 13% of the price you quote. Decide which one you mean before you put a number on it.
Should I price building work by the day or as a fixed price?
Both work. A fixed price suits a job where the scope is clear. Daywork suits work you can't fully see until you start, like breaking out old footings. Many jobs are a fixed price with variations charged as daywork on top, as long as the two are recorded separately.
Do I charge VAT on top of my price?
If you're VAT registered, yes: work out your price ex VAT, then add VAT at the right rate for the job. Most building work is standard rated, but some work, such as certain new builds, is treated differently, so check with your accountant if you're not sure.
Do I add CIS to my quote?
No. CIS isn't an extra charge on the customer. It's a deduction a contractor takes off the labour part of a payment to a subcontractor and pays to HMRC. It matters for your cash flow, so it's worth knowing what will land in your account.
