Pricing is one of the hardest parts of running a general contracting business. Charge too little and you work yourself to death for no profit. Charge too much and you lose bids. This guide will help you find the sweet spot.

Know Your True Costs

Before you set any price, you need to know exactly what it costs to run your business per hour. This includes:

• Direct labor: What you pay yourself and your crew per hour
• Materials: Average material cost per job type
• Vehicle costs: Gas, insurance, maintenance, payments divided by monthly jobs
• Insurance and licenses: Your annual cost divided by annual billable hours
• Overhead: Office, phone, software, marketing, accounting
• Profit margin: The money left over after everything else (aim for 20%+)

Flat Rate vs Hourly Pricing

Hourly pricing penalizes you for being good at your job. The faster you work, the less you earn. Flat rate pricing rewards efficiency and gives customers price certainty. Build a flat rate price book for your most common services and update it quarterly.

How to Raise Your Prices

If you have not raised prices in over a year, you are making less money than last year (thanks, inflation). Here is how to do it without losing customers:

1. Announce increases 30 days in advance for ongoing customers
2. Raise prices 5% to 10% at a time, never more
3. Time increases with the new year or your busy season when demand is high
4. Communicate the value: better materials, more training, rising costs

Competing on Value, Not Price

The cheapest general contractor in town is usually the busiest and the least profitable. Instead of competing on price, compete on value: better communication, cleaner work, faster response times, clear warranties, and professional appearance.

More Resources for General Contracting Businesses

• Website Design for General Contracting Companies
• SEO Services for General Contracting Businesses
• Google Ads Management for General Contracting Pros
• All General Contracting Marketing Services

Frequently Asked Questions