Everyone who's been at this a while has the same story: the $250 job that, counting the second store run, the missing material, and the two extra hours, ended up costing $270. You don't lose money by working badly — you lose it by quoting with incomplete numbers. Here's the full formula, with one example worked end to end.
First: your real rate isn't what you charge, it's what it costs you to exist
If you want to take home $25 an hour "clean", that can't be your rate, because your rate also pays for:
- Gas and the truck — the drive to the job, to the store, to the supplier.
- Insurance (liability, the vehicle) and the phone that rings to land the next job.
- Tools wearing out: bits dull, batteries die, ladders retire. All of it gets replaced with worked hours.
- The slow weeks. Nobody bills 40 hours every week. If you bill 25 real hours out of every 40 you're alive, your rate has to carry the other 15.
The honest math: to take home $25 clean per worked hour, your loaded rate — the one that goes in the estimate — runs $40 to $45. That number isn't greed: it's what it costs for you to exist as a business. Whoever charges the "clean" rate is paying out of pocket for the privilege of working.
The formula
Price = (materials × 1.10) + (hours × loaded rate) + 15% margin
Piece by piece:
- Materials × 1.10. The 10% covers waste and the small stuff nobody line-items: screws, sandpaper, tape, the tube of caulk. Priced with today's numbers, not from memory.
- Hours × loaded rate. Hours means ALL the job's time: loading the truck, the drive, the material run, final cleanup. If the job is "4 hours of installation", the job is 6.
- 15% margin. Margin isn't extra profit: it's insurance against what you couldn't see — the rotten stud behind the drywall, the valve that won't close, the second coat the color demanded. On demo work or older houses, take it to 20%.
The full example
A real job: closing off a drywall partition, with a door, finished and paint-ready.
| Item | Math | Total |
|---|---|---|
| Materials (list priced same-day) | $180 × 1.10 | $198 |
| Labor: 6 real hours | 6 × $45 | $270 |
| Subtotal | $468 | |
| 15% margin | $70 | |
| Quoted price | $538 → $540 |
Does it feel expensive next to the "I'll do it for $350" from somebody's cousin? Maybe. But the $350 guy is paying his gas, insurance, and drill bits out of his own wages — and the day the rotten stud shows up, he either loses money or walks off the job halfway. Both endings are bad, and both were priced in.
The three classic leaks
- Unbilled trips. Two store runs are two hours. At a $45 loaded rate, that's $90 out of your pocket if they weren't in the estimate. Trips are work hours.
- Quoting from memory. The drywall sheet price from six months ago is not today's price. Quote with the day's number — checking takes two minutes and saves the entire margin.
- Rounding down out of fear. The math said $540 and you said $450 "to not lose the job." You just gave away two hours of your life before starting. If the honest price loses the job, that job wasn't business — it was a favor with tools.
Extras: in writing, and BEFORE
Every scope change — "while you're here, could you also hang this TV?" — gets a new number before it happens, even if it's just a text: "The TV is $85 more, good?" The extra done without a number ends up free, and a client who won't accept a price up front wasn't going to accept it afterward either.
The formula, without the calculator
This is exactly what Cotiza builds when you tell it the job: materials priced from your area with waste included, labor broken out, and the final number on a professional estimate in English and Spanish — you always decide the final price, but the math arrives done, with everything inside. Whoever quotes with the complete math doesn't fear the number: they explain it to the client line by line, and that sells too.