You’re booked out three weeks. The phone won’t stop ringing. Jobs are coming in left and right.
And somehow, at the end of the month, there’s barely anything left in the bank.
Sound familiar? You’re not alone. It’s one of the most common problems we see with contractors and service business owners — and it almost always comes down to one thing: you’re not charging enough.
Not because you’re bad at business. But because nobody ever taught you how to actually price your work.
Let’s fix that.
Why “What Does Everyone Else Charge?” Is the Wrong Question
Most trades people price their services one of two ways:
- They guess based on what feels right
- They look at what competitors charge and match it
Both methods are a recipe for working yourself into the ground.
Here’s the problem — you have no idea what your competitor’s actual costs are. Maybe they own their equipment outright. Maybe they work out of their house. Maybe they’re losing money too and just don’t know it yet.
Your price needs to be based on your numbers. Full stop.
The Real Cost of Doing a Job
Before you can price correctly, you need to know what a job actually costs you. Most people only think about the obvious stuff — materials, labor. But the real number is bigger than that.
Here’s what actually goes into the cost of every job:
Direct costs (the obvious ones):
- Materials and supplies
- Labor — including your own time at a real hourly rate
- Subcontractors or helpers
- Job-specific equipment rental
Overhead costs (the ones people forget):
- Truck payment and fuel
- Insurance — liability, workers comp, vehicle
- Tools and equipment maintenance
- Phone, software, subscriptions
- Marketing and advertising
- Licenses and permits
- Accounting and bookkeeping (hi, that’s us)
- Your own health insurance if you’re self-employed
The invisible costs people almost never account for:
- Unbillable hours — estimates, drive time, phone calls, invoicing
- Slow seasons when work dries up
- Jobs that go sideways and cost extra time
- Unpaid invoices and bad clients
If your price doesn’t cover all of that — and then some — you’re not actually making money. You’re just staying busy.
The Formula You Actually Need
Here’s a simple way to think about pricing:
Job Cost + Overhead Allocation + Your Salary + Profit Margin = Your Price
Let’s break that down with a real example.
Say you’re a landscaper and you’re pricing a job that will take you one full day.
- Materials: $200
- Your labor (8 hours at a real rate of $35/hr): $280
- Overhead for the day (truck, insurance, tools, etc.): $150
- Your target profit margin (20%): $126
Total: $756
If you were charging $500 for that job, you just paid to do it.
What Is a “Real” Hourly Rate?
This is where most people get it wrong. They think their hourly rate is just what they want to take home per hour.
It’s not.
Your hourly rate needs to account for the fact that not every hour is billable. You spend time driving, estimating, answering emails, dealing with suppliers, doing paperwork. If you work 50 hours a week but only bill 30 of them, your billable rate needs to carry the weight of all 50.
A simple way to figure this out:
- Decide what you want to actually take home annually (be honest — not a dream number, a real one)
- Add in your overhead costs for the year
- Add your target profit
- Divide by the number of billable hours you realistically have per year
That’s your minimum hourly rate. Price below it and you’re losing.
Stop Competing on Price
We know. You’re worried that if you raise your prices, you’ll lose clients.
Some of them, maybe. And that’s okay.
The clients who leave because you raised your rates were never really your clients — they were just looking for the cheapest option. Those are also usually the clients who are hardest to work with, slowest to pay, and most likely to leave a bad review.
The clients worth having will pay a fair price for quality work.
If your work is good — and if you’re reading this, it probably is — your prices should reflect that. Confidence in your pricing signals confidence in your work. Undercharging actually makes some clients trust you less.
Practical Steps to Start Charging What You’re Worth
1. Do the math on your overhead. Sit down and add up every single business expense you have in a month. Most people are shocked by the real number.
2. Track your actual hours — all of them. Billable and non-billable. You need to know your real ratio before you can price accurately.
3. Set a profit goal, not just a break-even number. You should be making money above and beyond your salary. That’s what funds slow seasons, equipment replacements, and eventually — your retirement.
4. Review your prices at least once a year. Materials cost more. Insurance goes up. Fuel goes up. Your prices should too.
5. Get your books in order. You cannot price correctly if you don’t know your numbers. Clean, accurate bookkeeping isn’t just for tax season — it’s the foundation of every smart business decision you make.
The Bottom Line
You got into business to build something — not to work harder than everyone else for less than you deserve.
Pricing isn’t about being greedy. It’s about being sustainable. A business that doesn’t make money isn’t a business — it’s an expensive hobby.
At Kurpas Financial, we help blue collar business owners understand their numbers so they can make smarter decisions — including what to charge. If you’ve never really dug into your overhead or figured out your real hourly rate, that’s exactly the kind of thing we can help with.
We’re fully online, no waiting room required, and we speak plain English — not accountant.
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