How to Price Your Services: A Complete Guide for Contractors

Pricing is the number one struggle for solo tradespeople. Ask any plumber, electrician, or HVAC tech what keeps them up at night, and it's rarely the work itself — it's figuring out what to charge for it. Charge too little and you're working 60-hour weeks just to break even. Charge too much and the phone stops ringing. Most solo contractors land somewhere in the middle: busy enough to survive, but not profitable enough to get ahead.

The good news is that pricing doesn't have to be guesswork. There's a straightforward formula for setting your rates, and once you understand the math, you'll stop second-guessing every quote you send out. This guide walks you through the entire process, from calculating your base hourly rate to building tiered pricing options that increase your average ticket.

Know Your Numbers First

Before you can set any price, you need to know three numbers: what you want to earn, what it costs you to operate, and how many hours you can actually bill.

The formula looks like this:

Hourly Rate = (Desired Salary + Annual Overhead + Profit Target) / Billable Hours Per Year

Let's run through a real example. Say you want to take home $75,000 a year. Your overhead — truck payment, insurance, tools, gas, phone, accounting software, licensing fees — adds up to about $30,000 per year. And you want a 15% profit margin on top of your salary and overhead so you can reinvest in the business.

That gives you: ($75,000 + $30,000) x 1.15 = $120,750 in total revenue needed.

Now, how many hours can you actually bill? If you work 50 weeks a year and bill about 30 hours per week (the rest goes to driving, quoting, paperwork, and marketing), that's 1,500 billable hours.

$120,750 / 1,500 hours = $80.50 per hour.

That's your minimum. Below that number, you're not making the income you need. Most solo tradespeople are shocked when they first run this calculation because they've been charging $50 or $60 an hour and wondering why they can't get ahead.

Flat Rate vs. Hourly Pricing

Once you know your hourly rate, you have a decision to make: do you charge by the hour or by the job?

Hourly Pricing

Pros: Simple to calculate. You get paid for every minute you work. Good for diagnostic or troubleshooting calls where you don't know the scope upfront.

Cons: Customers hate it. They have no idea what the final bill will be, which creates anxiety and disputes. It also penalizes you for being fast — the better you get at your trade, the less you earn per job.

Flat Rate Pricing

Pros: Customers love knowing the price upfront. You earn more as you get faster. Eliminates billing disputes. Easier to upsell with good-better-best options.

Cons: Requires a price book to be accurate. If you underestimate a job, you eat the difference. Takes more upfront work to build out your pricing.

For most solo tradespeople, flat rate pricing is the better model. It builds trust with customers, rewards your expertise, and protects your margins. The key is having a well-built price book that accounts for labor time, materials, and overhead on every common task. Crewkit's free flat rate price books cover hundreds of common jobs across five trades, giving you a ready-made starting point.

The Markup vs. Margin Trap

This trips up more contractors than almost anything else. Markup and margin are not the same thing, and confusing them can cost you thousands of dollars a year.

Markup is the percentage you add on top of your cost. Margin is the percentage of the final price that's profit.

Here's the trap: if a part costs you $100 and you add a 50% markup, you charge $150. Your profit is $50. But your margin isn't 50% — it's 33%. That $50 profit is only a third of the $150 selling price.

If you told yourself you're operating on "50% margins" when you're actually using 50% markup, you're making a third less profit than you think. Over a year of jobs, that adds up fast.

The conversion: a 50% markup = 33% margin. A 100% markup = 50% margin. If you want a true 50% margin on materials, you need to double your cost (100% markup).

Know which number you're using, and be consistent.

Tiered Pricing: Good, Better, Best

One of the most effective pricing strategies in the trades is offering three options for every job. This isn't a gimmick — it's how customers naturally make decisions.

Take a water heater replacement as an example:

• Good ($2,800): Standard 40-gallon tank water heater, basic installation, 6-year warranty
• Better ($3,600): High-efficiency 50-gallon tank, expansion tank included, 9-year warranty
• Best ($5,200): Tankless water heater, gas line upgrade if needed, 12-year warranty, annual flush included

What happens? Most customers pick the middle option. They don't want the cheapest (feels risky) and the most expensive seems like too much. But your middle option has a higher margin than the basic one, so your average ticket goes up without any hard selling.

Some customers will pick the premium option — and they were never going to pick the basic one anyway. Without tiered pricing, you would have quoted them the basic price and left money on the table.

The psychology is simple: people make better decisions when they have context. A single price is a take-it-or-leave-it proposition. Three prices give the customer control, and that control translates to trust and higher close rates.

Emergency and After-Hours Rates

If you do emergency or after-hours work, you need a clear premium rate structure. Standard industry practice is:

• Evenings and weekends: 1.5x your standard rate
• Holidays: 2x your standard rate
• Emergency calls (immediate response): Minimum service charge of $150-$250, plus premium hourly rate

The key to making premium rates work is communicating them before you show up. When a customer calls at 10 PM with a burst pipe, the first thing you say is: "I can be there within an hour. Our after-hours rate is $120 per hour with a $175 minimum service charge. Would you like me to come out?"

Most customers will say yes — they're calling because they have an emergency and they need it fixed. They expect to pay more. The ones who push back were going to be problem customers anyway.

Don't feel guilty about premium rates. You're giving up your evening, your weekend, or your holiday. Your time outside normal hours is worth more, and pricing it that way is both fair and professional.

Start Pricing With Confidence

Pricing doesn't have to be the stressful guessing game that most solo tradespeople make it. Know your numbers, pick the right pricing model, understand the difference between markup and margin, offer tiered options, and charge what your off-hours time is worth.

If you want to skip the spreadsheet work, Crewkit's free pricing templates include flat rate price books, hourly rate calculators, and job estimators for plumbing, HVAC, electrical, general contracting, and landscaping. Download them, plug in your numbers, and start quoting with confidence today.