Setting Clear Profit Margins for Every Quote

Many trades businesses fall into the trap of pricing jobs based on what they think the customer wants to pay, rather than what the job actually costs to deliver. This race to the bottom ignores your overheads like insurance, fuel, and accounting fees, which eat away at your bottom line every single month. By shifting your focus to calculating a true profit margin on every quote, you protect your business from thin margins and cash flow shortages.

The first step is to calculate your hourly cost of doing business, not just your hourly wage. You must include your van maintenance, tool repairs, admin time, and the inevitable quiet weeks between major projects. If you only cover your immediate labour and material costs, you are not actually making a profit; you are simply treading water until an unexpected expense arises.

Once you understand your true costs, apply a consistent profit percentage that accounts for the risk and effort of the specific job. A complex renovation with high uncertainty should command a higher margin than a straightforward installation. If you find yourself frequently lowering your prices to win work, it is usually a sign that your business is targeting the wrong clients rather than suffering from a pricing issue.

Finally, review your completed projects against your initial quotes every quarter. This audit helps you identify where you might be underestimating material usage or time on site, allowing you to refine your pricing strategy for future growth. Consistency in your quoting process builds professionalism and ensures that your business can afford to grow, hire better staff, and invest in better equipment over time.