Why most contractors underprice their work
The instinct is to price competitively to win the job. The problem is that “competitive” often means underestimating, and underestimating means working for less than your time is worth.
The three most common places margin disappears:
- Overhead is invisible. Your van, fuel, tools, insurance, phone, and admin time are all part of what it costs to do the job. If they’re not in the quote, your margin is paying for them.
- Materials are estimated, not calculated. A bathroom tiling job with 20 sqm of tile is not just the tile — it’s tile, adhesive, grout, backer board, cutting waste, and disposal. Estimating from memory loses 8-12% on materials every time.
- Labour is quoted per day, not per hour. A two-day job that runs to three days because of a hidden issue is a job you work for free on day three. Build contingency in.
The three numbers every contractor needs to know
Before you quote any job, you need to know three things:
- Your minimum hourly rate. Take your target annual income, add overhead costs, divide by billable hours per year (typically 1,200-1,400 for a solo operator). That is your floor. Every job must cover it.
- Your material margin. You carry risk on materials — price changes, over-ordering, damage. A 10-15% margin on materials is standard. This is not markup for its own sake; it is risk coverage.
- Your target profit margin per job. Industry average for construction and renovation trades in Canada is 20-30% gross margin. If you’re consistently below that, something in the pricing process is wrong.
A practical quoting framework for renovation jobs
Use this structure for every quote:
- Line 1: Labour. Hours x hourly rate, broken down by stage if the job is multi-day.
- Line 2: Materials. Full list, not a round number. Add 10-15% margin to your cost price.
- Line 3: Subcontractors. Any work you bring in. Add 10-15% coordination margin.
- Line 4: Overhead allocation. Fixed percentage (typically 15-20%) applied to labour.
- Line 5: Contingency. 5-10% on complex or first-time jobs. Remove it from your next quote once you know the job well.
- Line 6: Profit margin. 20-30% applied to the total of the above.
The final number is your minimum price. You can choose to discount for a long-term client or a job that fits your schedule. But at least you know the floor.
The tools that make accurate quoting faster
The fastest way to improve pricing is to stop quoting from memory and start quoting from data. Every job you complete is a data point — how many hours it actually took, what materials actually cost, where the margin went.
Most contractors do not capture this data because they don’t have a system for it. The quote goes out on a PDF, the job happens, the invoice gets paid, and the numbers disappear into email. Nothing feeds back into the next quote.
A job management system that connects quotes to actual job costs closes this loop. When your quote for a bathroom tiling job links to the actual hours worked and materials used, your next quote for a similar job is automatically more accurate.
Common pricing mistakes to fix today
- Quoting the same day as the site visit without reviewing material costs. Look up current prices, not last month’s memory.
- Not adjusting for job complexity. A first-time job in an unfamiliar space costs more than your tenth job of the same type. Reflect that in the price.
- Discounting to win without knowing your floor. Know your minimum before you negotiate.
- Not invoicing a deposit. A 30% deposit before materials are ordered is standard. It is not pushy — it is professional.
Pricing accurately is not about charging more. It is about knowing what the job costs before you start it and making sure the quote reflects that. The contractors who grow consistently are the ones who know their numbers — not the ones who quote the lowest.
Duuabl’s AI quote assistant calculates materials and labour from site photos and voice notes. It flags when your margin is below your trade average. It keeps the numbers visible before you hit send.