How to Build Contingency Into a Quote Without Pricing Yourself Out of the Job
Written for the UK tradesperson, but the principles apply in most English-speaking countries.
Every tradesperson has opened up a wall, a floor or a roof and found something they didn't expect. Rotten timber, blown plaster, corroded pipework, wiring that should have been replaced years ago. If your quote didn't allow for it, the extra work comes out of your profit.
The obvious answer is to add a contingency allowance to every quote. But add too much and your price looks high next to everyone else's, and you lose the job. Add nothing, and you pay for every surprise yourself.
The answer is to match your contingency to the real risk on each job. This post shows you how to do that, so you're covered when things go wrong without pricing yourself out of work.
What contingency is, and what it isn't
Contingency is an allowance for genuine unknowns: things you can't see or predict at the survey, but which could reasonably happen on this type of job.
Contingency is not:
• A cover for poor estimating. If your labour or materials figures are wrong, fix the estimate, don't hide the error in contingency.
• Padding. Adding a flat 20% to everything "just in case" is guessing, and it makes your prices uncompetitive.
• Payment for extras. Extra work the customer asks for is a variation and should be priced separately.
Step 1: Get your estimate right first
Contingency only works if the rest of your price is accurate. If you've underestimated the labour or forgotten the waste allowance on materials, your contingency will be used up covering those mistakes before any real surprise happens.
Make sure you're estimating labour times accurately and pricing materials correctly before you think about contingency.
Step 2: Identify the real risks at the survey
Contingency should be based on what you actually see, not on a habit. At the survey, look for:
• The age and condition of the property
• Work you can't see until you start: behind walls, under floors, above ceilings
• Signs of previous poor workmanship or DIY
• Damp, rot or water damage
• Outdoor work that depends on the weather
• Access problems, working at height, or restricted working hours
• Other trades whose delays could hold you up
Write down each risk you find. This is what your contingency figure will be based on, and it also helps you explain your price if the customer asks.
Step 3: Match the percentage to the risk
Use a lower contingency on straightforward jobs and a higher one only where the risk genuinely justifies it. As a guide:
• Low risk: 2–5%. New work, everything visible, good access, no weather risk. For example, fitting new internal doors in a modern house.
• Moderate risk: 5–10%. Work in an existing property with some unknowns, or outdoor work exposed to the weather. For example, retiling a bathroom or laying a patio.
• High risk: 10–15%. Older properties, concealed work, or jobs where you know problems are likely. For example, a chimney repair or a rewire in a property with mixed old wiring.
• Very high risk: over 15%. At this level, a fixed price may be the wrong approach altogether. See Step 5.
Using the right level for each job keeps your low-risk quotes competitive, which is where most of your work is won, and gives you proper cover on the jobs that really need it.
A worked example
You're quoting to retile a bathroom in a 1930s house. Your labour, materials and other costs come to £2,000. The walls are old and some of the plaster may come away when the tiles are removed. That's a moderate risk, so you add 7.5%.
• Contingency: £2,000 × 7.5% = £150
• Price: £2,150
Now compare the alternatives:
• No contingency: £2,000. Two areas of plaster come away and need 4 extra hours to make good at £40.80 an hour, plus £30 of materials. That's £193.20 of extra cost, paid out of your profit.
• A flat 20%: £2,400. You're £250 more expensive than a competitor who priced the same job properly, and you'll probably lose it.
At 7.5%, the £150 covers most of the likely problem, and your price stays competitive.
Step 4: Don't count the same risk twice
If you've already allowed for a difficult job in your labour times, for example by using your "Difficult" figures because of poor access or awkward room shapes, don't add contingency for the same thing as well. Known difficulties belong in your labour estimate. Contingency is only for the things you can't know until the work starts.
Counting the same risk twice is one of the most common reasons careful tradespeople end up with prices that are too high.
Step 5: Deal with big unknowns separately
Some risks are too large or too uncertain to cover with a percentage. If you might find rotten joists under a floor, you could need two hours of repairs or two days. Adding enough contingency to cover the worst case would make your price far too high for the customer who has no problem at all.
Instead, deal with big unknowns in the wording of the quote:
• Exclude them clearly and say how they'll be charged if found, for example: "Any rotten joists found will be reported to you before work continues, and repairs will be charged at £40.80 per hour plus materials."
• Use a provisional sum, a stated allowance for a specific item that's adjusted up or down once the real cost is known.
• Give an estimate rather than a fixed quote for the part of the job you can't see.
This keeps your price fair for the customer and protects you properly. Our guide on how to quote like a professional covers exclusions and how to word them.
Step 6: Decide whether to show your contingency
You have two options:
• Build it into your price. This is the most common approach on domestic work. The customer sees one total price, and you keep any contingency you don't use.
• Show it as a separate line. This is more common on commercial work and larger jobs. You explain what the contingency covers and, if you choose, agree to reduce the final bill if it isn't needed. Some customers trust this approach more, and it can help you win work against a competitor with a higher single price.
If you tell a customer you'll refund unused contingency, you must do so. Put it in writing so there's no argument at the end of the job.
Step 7: Track whether your contingency was used
After each job, check whether you needed the contingency and how much of it. Over time, you'll see which types of job regularly use all of it and which never touch it. Adjust your percentages to match. This is how your contingency figures become accurate instead of guesses.
Having no contingency at all is one of our 20 common pricing mistakes tradespeople make. Using the same figure on every job, whatever the risk, is nearly as costly.
The short version
Get your labour and materials estimate right first. Identify the real risks at the survey. Use a low contingency on straightforward jobs and a higher one only where the risk justifies it. Don't add contingency for difficulties already in your labour times. Deal with large unknowns through exclusions, provisional sums or estimates, not a huge percentage. Decide whether to show it or build it in. Track what you actually use and adjust.
See whether your contingency is working
TradeProfit shows your forecast profit when you create a job, and your real profit when you close it. Compare the two across your jobs and you'll see where surprises are eating into your margin, and which types of work need more contingency or less. The forecast vs actual feature does the comparison for you. It's free for the first three months, and no credit card is needed.
Know your real profit on every job.
Want to go further? The Complete Guide to Estimating for Tradespeople has a full chapter on risk and contingency, and applies it to worked estimates across 15 trades, explaining the contingency choice on every job. Its free estimating toolkit includes an AI prompt for reviewing the risk and contingency on your own quotes.