/ Pricing Workshop

What Should I Charge? Contractor Pricing Workshop

Most service contractors undercharge by 20–35%. This free 4-step workshop walks you through your real overhead, burdened labor, job-level pricing, and the revenue you actually need to hit your income goal. Every number updates live as you type — no spreadsheets, no guessing.

/ Step 1 of 4

Monthly fixed costs

/ Tech capacity

/ The reveal

Overhead cost per billable hour

$29.08/ hour

Every hour a tech is on a job, $29.08 goes to keeping the lights on — before anyone gets paid.

Monthly overhead

$3,150

Annual overhead

$37,800

Billable hrs / tech / yr

1,300

Total billable hrs / yr

1,300
Cost breakdown$3,150
Vehicles$1,200(38%)
Insurance$800(25%)
Marketing$500(16%)
Software$300(10%)
Phone$200(6%)
Tools$150(5%)
Step 1 of 4

Built by BasisWeb — custom websites & dashboards for service businesses.

/ Pricing Guide

How to price service calls as a contractor — without guessing

Almost every service contractor we meet — HVAC, plumbing, electrical, roofing — has the same pricing problem. They quote based on what the guy down the street charges, what their last boss charged ten years ago, or what "feels right" on the phone. None of those methods account for what a job actually costs to deliver, which is why most small contractors are operating on 5–10% net margin when they should be at 15–20%.

Real pricing starts with three numbers: your overhead cost per billable hour, your burdened labor rate, and your target profit margin. Skip any one of them and your prices are guesses.

The overhead-per-hour reveal

Overhead is every fixed cost of keeping the lights on — rent, vehicles, insurance, software, marketing, phones, tool amortization, owner salary if you're paying yourself. Add it all up for a month, multiply by twelve, and you have annual overhead. Then divide by your total billable hours per year (not total hours worked). A one-tech shop working 250 days at 8 hours per day with 35% non-billable time has 1,300 billable hours in a year. If your annual overhead is $40,000, you're spending roughly $31/hour just to keep the business breathing — before you pay anyone, buy a single part, or drive to a job.

Burdened labor: the cost behind the hourly wage

A $25/hr tech does not cost $25/hr. They cost $32–$40/hr after you account for the employer half of FICA, federal and state unemployment tax, workers comp, paid time off, holidays, training hours, health insurance, phone and tool allowances. The average HVAC company burden multiplier sits between 1.3× and 1.5× base wage. Plumbers run similar. Electricians in high-comp states can be higher. The calculator above uses live SUTA wage bases for Arizona, California, Texas, Florida, New York, Ohio, Pennsylvania, Illinois, Georgia, and North Carolina — plus a national-average fallback.

Profit margin vs. markup (do not confuse them)

These are not the same number. A job with $800 in costs marked up 25% sells for $1,000 — but the profit margin is only 20% ($200 profit on $1,000 revenue). When you want to hit a 20% profit margin, divide total cost by 0.80, not multiply by 1.20. This one piece of math is why contractors who think they're making 25% are actually making 20%, and it compounds into real money every year.

Reverse-engineering your income goal

Once you know your cost structure, pricing becomes math. But there's one more layer — the owner's personal income goal. If you want to take home $100,000 a year after tax at a 25% bracket, you need $133,000 in gross personal income. At a 20% net profit margin that means the business needs $666,000 in gross profit, which means roughly $700,000+ in revenue once you add annual overhead. At a $500 average ticket, that is 1,400 jobs per year — about 27 per week, or roughly 2.6 full-time techs if each tech runs 2 jobs a day. If those numbers feel impossible, that is the math telling you either your prices are too low or your close rate is too low — usually both.

/ Frequently Asked

Contractor pricing — common questions

Start with your burdened labor rate (what a tech actually costs per billable hour after payroll taxes, workers comp, PTO, training, and benefits), add your overhead allocation per hour, then layer in parts at your markup, subcontractors, and permit fees. Finally, divide that total cost by (1 − your target profit margin) to get the quoted price. If you charge what feels 'fair' instead of running this math, you will almost certainly undercharge.
Most residential HVAC companies target a net profit margin between 10% and 20%, with the best-run shops pushing 20–25%. Gross margins on service jobs typically run 50–55% once parts markup is included, but overhead and labor burden eat most of that before it reaches the bottom line. If you are netting less than 10%, you are almost certainly mispricing jobs, undermanaging parts markup, or both.
Add up every fixed cost that keeps the business running for a month — rent, vehicles, insurance, software, marketing, phone, tool amortization, and so on — then multiply by 12 for annual overhead. Divide that annual number by your total billable hours across the fleet (not total hours worked — subtract drive time, admin, callbacks, and training) to get your true overhead cost per billable hour. Most plumbing businesses are shocked when they see this number for the first time.
As a rule of thumb, burdened labor rate is typically 1.3× to 1.5× the base hourly wage once you factor in payroll taxes (FICA, FUTA, SUTA), workers comp, paid time off, holidays, training, health insurance contributions, and tool/phone allowances. So a $25/hr tech usually costs $32–$40/hr once fully loaded. Our calculator above uses the actual SUTA wage bases and new-employer rates for your state to give you a closer number.
Work backward: start with the annual revenue you need (from Step 4 of this tool), divide by your average ticket to get jobs per year, divide by 12 to get jobs per month, then divide by your lead-to-close rate. If you need 100 jobs per month and close 50% of leads, you need 200 qualified leads hitting your funnel every month. Most contractors underestimate this number by half — which is exactly the gap a good website and marketing system closes.
The arithmetic is exact — every formula in this workshop is industry-standard accounting with no hidden fudge factors. The accuracy ceiling is your inputs: if you estimate non-billable time at 20% when the real number is 40%, your overhead-per-hour will be off. Use this tool to get within striking distance, then refine with your actual bookkeeping data over a few months.
BasisWeb — a small agency that builds custom websites, dashboards, and automation for service contractors. We operate ServiceCallTracker, CoolQuote PHX, and a custom operations command center for Arizona restaurants, so the numbers baked into this calculator come from real pricing conversations with real HVAC, plumbing, electrical, and roofing owners.