Underpricing is more common than overpricing in the trade industry. The fear of losing a job to a cheaper competitor drives most pricing decisions, and the result is a business that is busy but not profitable.
A customer who chooses the cheapest quote is telling you what they value. A customer who chooses your quote — at a fair price — is telling you something different. The goal is not to win every job. It is to win the right jobs at prices that make your business worth running.
How to Set Prices That Work for Your Business
Calculate your actual cost base first
Before setting any prices, calculate what an hour of your working time actually costs to deliver. Include: your wage or target hourly rate, the cost of tools and equipment amortised over their lifespan, vehicle costs (fuel, insurance, maintenance, finance), public liability insurance, certification renewal fees, marketing costs, and any admin time. Most trades who do this calculation discover their real cost per productive hour is between 20% and 40% higher than they assumed.
Price to the quality of your work, not the cheapest competitor
The cheapest competitor in your market is setting their price based on their cost structure, their quality level, and their customer acquisition strategy. Their pricing tells you nothing useful about what you should charge. If your work is better, your credentials are stronger, and your customer experience is higher quality, your price should reflect that. Customers who value quality will pay for it. Customers who will only buy on price are not your target customer.
Separate materials from labour clearly
Quoting a single all-in price obscures the value of your labour and makes your quotes harder to compare against competitors who provide itemised quotes. Separating materials and labour gives customers a clear view of what they are paying for your time and expertise. It also protects your margin when material costs change — if you quote all-in and materials increase, your margin takes the hit.
Quote in writing every time
Verbal quotes lead to disputes. A written quote — even a short email confirmation — protects both parties, sets expectations clearly, and signals professionalism. Customers who receive a written quote before work begins have better experiences and are more likely to refer you. Trades who quote in writing consistently report fewer payment disputes and higher customer satisfaction scores than those who rely on verbal agreements.
Be willing to lose jobs on price
Winning a job at a price that does not cover your costs properly is worse than losing it. The time and resources spent on a low-margin job are time and resources that cannot be spent on a properly priced one. Some trades report that their average job value increased significantly after they started quoting more accurately and accepting that they would lose 20% to 30% more jobs on price. The jobs they lost were the ones they did not want.
The customer you want versus the customer you get
A business that competes primarily on price attracts customers who care primarily about price. Those customers are harder to retain, more likely to dispute invoices, less likely to refer, and less likely to return for future work.
A business that competes on quality, reliability, and credentials attracts customers who value those things. They pay fair prices, refer their neighbours, return for repeat work, and leave the kind of Google reviews that build your reputation.
Your pricing strategy is also a customer selection strategy. Set your prices to attract the customers you want to work with.