How to Price a Construction Job — The Formula That Guarantees Profit

The #1 reason tradies go broke? Underquoting. Here's a simple formula used by profitable builders across Australia: (Labour × Hours) + Materials + 20% Overhead + 25% Margin. Plus: how to adjust for site conditions, access, and client type.

The Profit Formula

Stop guessing. Use this:

Quote Price = (Hourly Rate × Estimated Hours) + (Materials × 1.15) + Overhead Allowance + Profit Margin

Where:

• Hourly Rate: $80–$120/hr for licensed tradies
• $100–$150/hr for builders
• $50–$70/hr for labourers/helpers
• Materials markup: Trade price + 15% to client

Step 1: Calculate Labour Costs

Don't just guess hours. Break the job into phases:

• Site prep & set-up: 1–4 hrs
• Demolition/removal: depends on scope
• Core work (e.g. paving, framing): bulk of hours
• Clean-up & waste removal: 1–2 hrs
• Travel time: charge portal-to-portal

Step 2: Price Materials Accurately

Get supplier quotes, not Bunnings shelf prices. Markup 15% to cover:

• Time spent ordering & picking up
• Fuel for supplier trips
• Wastage (5–10% for pavers, 3% for timber)
• Consumables (screws, nails, glue, silicone)

Step 3: Don't Forget Overhead

Your hourly rate only covers direct labour. Overhead is everything else:

• Vehicle costs (fuel, rego, insurance, servicing)
• Tool depreciation & replacement
• Insurance (public liability, income protection)
• Phone, internet, software subscriptions
• Accountant fees
• Marketing & advertising
• Sick days, holidays & super (11.5%)

Step 4: Add Your Profit Margin

This is where most tradies undercut themselves. Minimum 20% margin, target 25–30%.

On a $10,000 job: 20% margin = $2,000 profit. 10% margin = $1,000. That extra $1,000 is what pays for your holiday, kids' school fees, and retirement.

Step 5: Adjust for Risk

Add premium for:

• Difficult access (narrow side passages, steep blocks)
• Poor weather forecast
• Nightmare clients (you know the type)
• Urgent/rush jobs (+20%)
• Working around existing structures
• Heritage or council restrictions