Contractor Guides

Flat rate pricing is generally more profitable for experienced contractors. It rewards efficiency, provides price certainty to customers (which increases close rates), and eliminates the need to track hours. However, hourly pricing may be better for diagnostic work, complex custom jobs, or when you’re still learning time estimates for specific tasks.

Most contractors should target 40-60% gross margin on materials and apply a labor multiplier of 2.5-3.5x their base hourly cost. This means if your fully-burdened labor cost is $35/hour, you’d charge $87-$122/hour. Markup varies by trade: HVAC and electrical typically command higher margins than general contracting.

Start by listing your 20-30 most common jobs. For each, calculate: (1) average time to complete, (2) materials cost, (3) labor cost including burden, (4) overhead allocation, and (5) profit margin. Add these up for your flat rate price. Review and update quarterly based on actual job data. Many contractors use software like BuildFolio to automate this process.

Your billable labor rate should be 2.5-3.5x your burdened cost (wages + taxes + insurance + benefits). If you pay a technician $25/hour and burden adds 30%, your cost is $32.50. Your billable rate should be $81-$114/hour. Top-performing contractors in premium markets charge $150-200+/hour.

Review your price book quarterly at minimum. Update immediately when: (1) material costs change significantly (5%+), (2) labor costs increase, (3) you notice jobs consistently running over or under time estimates, or (4) competitors adjust their pricing. Most successful contractors do a full price book audit annually with quarterly spot-checks on high-volume jobs.

Generally, no. Present a single flat rate price for the job. Breaking down labor, materials, and markup invites negotiation and commoditizes your expertise. The exception is large projects where a line-item estimate builds trust. Even then, use bundled pricing for labor+materials rather than showing your markup percentage.