What goes wrong when your pricing is not accurate?
When you price without a clear system, your profit margins erode. You end up underpricing jobs, creating inconsistent quotes, and missing cost increases you never accounted for. The practical consequence is that you cannot sleep, because you are never sure whether the work you booked will actually make you money. Getting your pricing right is one of the biggest milestones you can reach as a trade business owner.
What are the four elements that make up every price?
Every job you price has four components.
- Labour costs: the total expense of paying employees or subcontractors, including wages and benefits. Wages fluctuate and they only go one direction: up.
- Material costs: the expenses for every product, tool or supply required to complete the job.
- Markup: added on top of labour and materials to cover overheads and generate profit.
- Efficiency: the element with the most upside. You can only push materials so cheap and markup so high before you lose customers, but efficiency has no ceiling. The more efficiently your team works, the more profit the business generates without changing a single price.
What are the three ways to charge for a job?
There are three charging types, each suited to different work.
The do-and-charge model bills for actual hours worked plus materials. It is easy to book in, but it leaves you exposed to buyer's remorse and makes it very hard to recover payment if the client disputes an invoice, because no fixed price was agreed upfront.
Fixed price sets a price for the whole job based on estimated hours, materials and markup. The client approves a detailed description before work starts, so both sides know exactly what they are getting. Any variations need to be pre-approved. This works best on project work lasting more than a day.
Price per point is where you bundle labour, materials and markup into one itemised cost for each job component. A standard double power point is one price. The client wants ten of them, they know the total immediately. If quantities change on site, there is no dispute because the price per item was already accepted.
Why does price per point change what is possible in your business?
Price per point is a scalability system. Once you have your shopping list built, anyone on your team, including people who have never held a tool, can quote, convert and book jobs. A service operations manager who was previously a car salesman can sell electrical work using this system, fully without owner involvement.
It also gives your team a real efficiency incentive. If a job is priced for ten hours of labour and your tradesperson completes it in five, they are running at two hundred percent efficiency. The business earns more, the client is happy because the job is done faster, and you can use that efficiency data to reward the right people. With a do-and-charge model you can never exceed one hundred percent: you only ever bill for the actual time worked.
How do you review your pricing to keep it profitable?
Pricing is not a set-and-forget task. After every job, compare actual time worked against the billable time to get a job efficiency figure. Run daily efficiency reports, weekly sales reports and monthly reviews across all of the above. Every quarter, sit in your director's chair and look at where you went right and where you went wrong, then steer the business accordingly.
You also need to review outside the regular schedule when something significant changes: a team member on sick leave, a sharp rise in material costs, a new van or tool investment, or taking on non-billable staff like admin. Non-billable staff are an operational cost that becomes part of your overhead. If your prices do not reflect that overhead, you are funding their wages out of your margins without realising it.
How do you convert more quotes without spending more time on site?
Quoting has a real cost. Every time you drive to a job to quote, you are spending non-billable time that eats into profitability. A shopping list pricing system lets you quote over the phone or via video call, skipping the site visit entirely and converting faster.
When you do quote on site or send a written proposal, walk the client through it on a video call or use a recorded video link. Present good, better and best options: most clients choose the middle tier, and a clear choice between options means they are comparing your packages, not comparing you to a competitor. A well-structured proposal eliminates confusion by spelling out scope, cost and options clearly.
Follow up immediately after sending any quote. Call or message the same day. Follow up again the next day, then three days later, then a week later. Quotes do not die until you receive a clear no. Doing the work of quoting and then not following up is like taking a shot at goal and walking away before the ball crosses the line.
