20 Common Pricing Mistakes Tradespeople Make

Written for the UK tradesperson, but the principles apply in most English-speaking countries.

Most tradespeople who struggle for money aren't short of work. They're good at their trade and they're busy. The problem is their prices. A few pounds lost on every job, from a dozen small mistakes, adds up to thousands of pounds a year.

Here are the 20 most common pricing mistakes, and how to fix each one. If you recognise more than a few, your prices need attention. For a step-by-step method that avoids all of them, read our guide on how to price a job properly.

Setting your rate

Mistake 1: Copying your competitors' rates

Charging what everyone else charges feels safe, but you have no idea whether their rates cover their costs. Many of them are undercharging too. Their costs aren't your costs, and their rate may be slowly putting them out of business.

The fix: Work out your own rate from your own costs and the income you need. Use competitors' rates only as a check afterwards, not as a starting point.

Mistake 2: Leaving overheads out of your rate

Insurance, tools, phone, accountant, software, advertising, workwear, trade memberships and training all cost money every year. If your hourly rate only covers what you want to pay yourself, every one of these costs comes out of your wages.

The fix: Add up your yearly overheads and build them into your hourly rate.

Mistake 3: Assuming every working hour is chargeable

You don't get paid for the time you spend quoting, travelling, buying materials, doing paperwork and waiting between jobs. If you divide your costs by every hour you work, your rate will be too low.

As a rough example, 46 working weeks at 40 hours is 1,840 hours a year. Once you take out non-chargeable time, many sole traders end up with somewhere between 1,200 and 1,400 chargeable hours.

The fix: Work out your realistic chargeable hours and divide your costs by that figure, not by the total hours you work.

Mistake 4: Treating your wages as your profit

If your rate only pays your wages, your business makes no profit. There's nothing set aside for a new van, a quiet month, a broken tool or growing the business.

The fix: Add a profit margin on top of your wages and overheads. Profit is what your business earns. Your wages are a cost.

Mistake 5: Undercharging for travel

Your van costs you money every mile in fuel, insurance, finance, tax, servicing and tyres. The time you spend driving is time you're not earning. Many tradespeople charge for neither.

The fix: Work out what your van really costs per mile and include travel time and mileage in every price. TradeProfit converts your van costs into a real cost per mile so travel is priced on every job.

Estimating labour

Mistake 6: Pricing the whole job as one guess

"That's about three days" is a guess, not an estimate. One big guess can be badly wrong, and you won't know until you're halfway through the job.

The fix: Break every job into individual tasks and estimate each one in labour hours. Our guide on estimating labour times accurately shows you how.

Mistake 7: Forgetting the hidden time

Setting up, protecting floors, clearing up, removing waste, testing, certification and the handover all take time. None of it looks like "the job", so it gets left out.

The fix: Go through your task list and add these items every time. They're real hours and you should be paid for them.

Mistake 8: Forgetting labourer costs

If you take a mate or labourer on a job, their day rate is a cost. If it isn't in your price, it comes out of your profit.

The fix: Include every labourer day in the price, and check your profit with their cost included.

Pricing materials

Mistake 9: Not allowing for waste

You never use exactly the quantity you measure. Tiles break, timber gets cut, and boxes only come in fixed sizes. If your price is based on the exact measured quantity, you pay for the rest yourself.

The fix: Add a realistic waste allowance and round up to full pack sizes. Our guide on pricing materials correctly gives typical waste figures and a worked example.

Mistake 10: Forgetting consumables

Screws, fixings, sealant, adhesive, filler, blades and dust sheets don't appear on a main materials list, but they can add £50 or more to a medium-sized job.

The fix: List them on larger jobs, or add a consumables allowance on smaller ones.

Mistake 11: Using out-of-date material prices

Pricing from what you paid months ago, or from memory, means you'll often pay more than you charged.

The fix: Check current prices before you quote, price stock from the van at replacement cost, and state how long your quote is valid for.

Mistake 12: Confusing mark-up and margin

A 20% mark-up does not give you a 20% margin. £1,000 of materials marked up by 20% sells for £1,200. The £200 profit is only 16.7% of the selling price.

The fix: Know which figure you're using. For a genuine 20% margin, you need a 25% mark-up.

Mistake 13: No allowance for unknowns

Old properties, hidden pipework, rotten timber and outdoor work in bad weather all carry risk. If your price assumes nothing will go wrong, you pay when it does.

The fix: Add a contingency allowance based on the genuine risk on each job: small on straightforward work, larger where there are real unknowns.

Quoting and selling

Mistake 14: Competing on price

If you win work by being the cheapest, you attract customers who only care about price. They're the ones most likely to haggle, demand extras and pay late.

The fix: Compete on reliability, quality and service. Aim for customers who value those things. Our guide on how to win more profitable work explains how.

Mistake 15: Cutting your price when a customer pushes back

If you drop your price as soon as a customer questions it, you're telling them it was too high in the first place. You're also teaching them to haggle next time.

The fix: Explain what your price covers. If the customer genuinely can't afford it, reduce the scope of work, not the price for the same work.

Mistake 16: Sending vague quotes

"Supply and fit new bathroom, £6,000" leaves the customer free to argue that anything bathroom-related is included.

The fix: Write a clear scope of work, state what's excluded, and set out payment terms. Our guide on how to quote like a professional covers what every quote should include.

Mistake 17: Doing extras for free

"While you're here, could you just..." A few small extras on every job can wipe out your profit, and customers soon expect them.

The fix: Price every extra and get the customer's agreement in writing before you do the work.

Managing the money

Mistake 18: Getting caught out by VAT and tax

If you're VAT registered and quote £6,000 meaning plus VAT, but the customer reads it as the full price, you receive £6,000 including VAT. That's £5,000 for you and £1,000 for HMRC, so you've lost £1,000. Money set aside for income tax and National Insurance also gets spent if it sits in the same account as everything else.

The fix: If you're VAT registered, always show clearly whether prices include VAT. Put money aside for tax every time you're paid, in a separate account.

Mistake 19: Never reviewing your prices

Fuel, insurance, materials and everyday living costs go up every year. If your prices stay the same, you're taking a pay cut every year without noticing.

The fix: Review your rate and your costs at least once a year, and raise your prices when your costs rise.

Mistake 20: Never checking estimates against actual results

This is the mistake that keeps all the others going. If you never compare what you estimated with what the job actually took and cost, you'll repeat the same errors on every job and never know it.

The fix: After every job, compare your estimated hours and costs with the actual figures, and note why any difference happened. Use what you learn on your next quote.

The short version

Build your rate from your own costs, your real chargeable hours and a profit margin. Break every job into tasks and include the hidden time. Allow for waste, consumables, current prices and risk. Don't compete on price, don't cut it when challenged, and don't do extras for free. Handle VAT and tax properly, review your prices every year, and check every estimate against what actually happened.

Stop making mistake 20

TradeProfit fixes the mistake that keeps all the others going. Enter your rates and costs once. Add each job with its quote price, estimated hours, materials and travel, and see your forecast profit before you quote. When the job's done, log the actual hours and costs and see your real profit against your forecast. After a few jobs, you'll know exactly where your pricing is losing you money. It's free for your first 10 jobs, and no credit card is needed.

Want to go further? The Complete Guide to Estimating for Tradespeople covers labour rates, overheads, materials, mark-up and contingency in full, with worked estimates across 15 trades. Its free estimating toolkit helps you build your own labour-time database from your real jobs.