How to price labor on a job and turn it into a quote
Start from what an hour really costs you, count every hour the crew is paid for, add the job costs and a contingency you can see, then price it. One siding repair, every number shown.
Direct cost labor + materials + travel + disposal + other
Contingency direct cost × contingency %
Overhead direct cost × overhead %
Selling price (direct + contingency + overhead) × (1 + markup)
Step 1: know what an hour costs you
The number that goes into a labor estimate is your cost per hour: the wage plus the payroll costs you pay on top of it. Your payroll records, or your accountant, have the real figure for each person.
Don’t use your billing rate here. A billing rate already has your profit in it; put a markup on top and you charge for it twice, or worse, you think you’re making a profit you aren’t. If you work the job yourself, give your own hours a cost too.
Step 2: count every hour the crew is paid for
Not just the hours on the wall. Loading the truck, driving, setup, the work, cleanup and the dump run are all paid hours. The example job is replacing a 12 × 8 ft section of rotted siding with a lead and a helper. Every rate below is an example, not a market rate.
| Crew line | People × hours × cost/hour | Labor |
|---|---|---|
| Lead | 1 × 9 × $42 | $378.00 |
| Helper | 1 × 9 × $24 | $216.00 |
| Labor | 18 crew hours | $594.00 |
Step 3: add the job costs
| Cost | Amount |
|---|---|
| Labor | $594.00 |
| Materials: siding, wrap, trim, fasteners, caulk (what you pay) | $310.00 |
| Travel: fuel for two trips | $36.00 |
| Disposal: dump fee for the old siding | $55.00 |
| Direct job cost | $995.00 |
Step 4: add a contingency you can see
A contingency is a percentage of the direct cost set aside for what you can’t see yet — on a siding job, maybe rotten sheathing behind the boards. Showing it as its own line is more honest than padding the hours, and it’s easier to talk through with a customer.
The example uses 10%: 10% of $995.00 = $99.50, so the job cost is $1,094.50. How big yours should be depends on how much of the job you can see before you start, and only you know that.
Step 5: add your overhead share
Truck, insurance, phone, software: last year’s overhead ÷ last year’s direct job costs gives you a rate. Say it’s 15% (an example; use your own books): 15% of $995.00 = $149.25. Cost to price on: $1,094.50 + $149.25 = $1,243.75.
Step 6: price it, and read what it leaves you
With a 30% markup: $1,243.75 × 1.30 = $1,616.88 (rounded to the cent).
| Line | Amount |
|---|---|
| Labor (18 crew hours) | $594.00 |
| Materials | $310.00 |
| Travel | $36.00 |
| Disposal | $55.00 |
| Direct job cost | $995.00 |
| Contingency (10%) | $99.50 |
| Overhead share (15%) | $149.25 |
| Markup (30% of $1,243.75) | $373.13 |
| Selling price | $1,616.88 |
| Line | Amount |
|---|---|
| Gross profit (price − job cost, contingency counted as spent) | $522.38 · 32.3% |
| Left after overhead | $373.13 · 23.1% |
| If the contingency isn’t needed | $621.88 |
| Price per crew hour ($1,616.88 ÷ 18) | $89.83 |
The price per crew hour is a quick sanity check: compare it with what you bill by the hour, or with other jobs that went well. “Left after overhead” is still not net profit: your own pay and income tax come out of it.
Build your own quote in the calculator
The hour you forget costs more than an hour
Say loading up and cleanup take one more hour each for the lead and the helper. That’s 2 crew hours, $66.00 of labor. Run back through the same steps and the right quote is $1,724.13, which is $107.25 more, because the contingency, the overhead share and the markup all grow with it. Leave the hours out and the $66.00 still gets paid — out of your contingency or your profit.
Four ways labor quotes come out low
1. Using the billing rate as the cost
It hides your real cost and double-counts the profit. Keep two numbers: what an hour costs you, and what you charge.
2. Pricing your own hours at zero
The “profit” is then really your wage, and it disappears the day you hire someone to do that work.
3. Counting only the hours on the wall
Drive time, setup and cleanup are paid hours. The example above shows what two of them are worth.
4. Discounting without redoing the math
A discount comes straight out of what’s left. Take $100 off the $1,616.88 quote and “left after overhead” drops from $373.13 to $273.13 — more than a quarter of it.
What this method doesn’t cover
- Sales tax, permits and licensing aren’t in this math. Add whatever applies where you work.
- Your rate per hour is yours to set; this guide won’t tell you what to pay or charge.
- Very uncertain work. If a big part of the job can’t be seen, price that part separately or as time and materials rather than stretching the contingency.
For more on markup vs margin and where overhead fits, read the markup vs margin guide.
Your rates, every time you quote
TalkEstimate keeps your own prices and rates in one list and builds the estimate from them while you talk through the job. The AI organizes what you said; it never sets a price.
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