Labor pricing
Labor cost is hours times burdened labor rate. Burdened rate includes wages, payroll taxes, workers compensation, liability insurance share, and benefits. A 30 dollar per hour worker often costs 45 to 50 dollars burdened. Estimating with bare wages is a common cause of underbidding.
Material pricing
Get current quotes from suppliers, not online retail prices. Lock in pricing in writing whenever possible. Include sales tax, delivery, and any restocking fee on returns. Build in a small markup on material to cover handling, even if the customer is paying cost plus.
Overhead and profit
Overhead is the cost of running the business: office, vehicles, insurance, software, owner time not billable to projects. Allocate overhead as a percentage of direct cost, usually 10 to 20 percent. Profit is what is left after overhead and direct cost; aim for at least 10 percent for sustainable growth.
Mini-quiz
Attempt 1 · 3 questions
Check your understanding. Passing is 70% — but you can keep going to the next lesson either way.
Question 1
Based on "Labor pricing", which statement is correct?
Question 2
Based on "Material pricing", which statement is correct?
Question 3
Based on "Overhead and profit", which statement is correct?