How to Price a Job: Labour, Materials, and Markup Explained
A practical breakdown of how Canadian tradespeople should price jobs — labour rates, material markup, overhead, and profit — so quotes are profitable, not just competitive.
A lot of tradespeople price jobs by gut feel, or by matching whatever a competitor seems to charge. That approach works fine until a busy season quietly turns into a break-even one. Here's a straightforward way to price a job so the number on the quote actually protects your margin.
Start with your true labour cost
Your hourly labour rate needs to cover more than just take-home pay. It should include:
- Wages (yours and any crew)
- CPP/EI contributions and any WSIB or provincial workers' compensation premiums
- Vehicle and fuel costs
- Tools, equipment depreciation, and insurance
- Non-billable time (quoting, driving, admin)
Many tradespeople underestimate this by 20–30% because they only count wages, not the overhead sitting behind every billable hour.
Materials: mark them up, don't just pass them through
Charging clients exactly what materials cost you means you're financing the purchase, storage, and any waste or returns for free. A standard materials markup in most trades runs 15–25% over your cost — higher for smaller specialty items, sometimes lower for large-ticket items like appliances or windows where the base cost is already high.
Overhead and profit — don't skip these
Overhead (insurance, vehicle, software, marketing, admin time) and profit margin should be built into every quote, not treated as whatever's left over. A common structure:
- Direct costs (labour + materials): the baseline
- Overhead: typically 10–20% added on top
- Profit margin: typically 10–20% added after overhead
Skipping the overhead and profit steps is the single most common reason contractors feel "busy but broke" — the jobs are covering costs but not actually generating a return.
Watch for scope creep
Verbal add-ons during a job ("while you're here, can you also...") are one of the fastest ways to erode margin. Any change to scope should generate a quick written change order with updated pricing — even a one-line text message confirmation is better than nothing.
Putting it into a quote
None of this needs to be visible to the client line-by-line — most quotes just show labour and materials totals per task. But pricing it this way internally, rather than guessing, is what keeps a full calendar profitable instead of just busy. Quoting software built for tradespeople can apply consistent markup and overhead rules automatically, so every job gets priced the same disciplined way — see how it works for general contractors and builders.