How to Price a Building Job
To price a building job, you build up the cost from its parts — materials, labour, plant and preliminaries — measured from a takeoff of the drawings, then add your margin and a contingency for risk. Pricing from a measured takeoff, rather than a gut-feel lump sum, is what keeps a builder from underquoting the job.
Key takeaways
- A reliable price is built up item by item from a measured takeoff — materials, labour and plant — not guessed as a single lump sum.
- Labour should be priced at its full on-cost, including superannuation, insurance and leave loading, not just the base hourly wage.
- Preliminaries are the site-wide, usually time-related costs of running the job, and are one of the most commonly under-priced parts of any quote.
- Margin and contingency sit on top of cost and should reflect your own overheads and the specific risk of the job, not a fixed rule of thumb.
- Pricing from a measured takeoff, generated 60-75% faster with automated software like My Trade Hub, is what stops the missed items that cause underquoting.
What pricing a building job actually involves
Pricing a building job well means building the price up from its parts rather than arriving at a single lump-sum figure by feel. That means starting from a measured takeoff of the drawings, costing materials and labour against each item, adding the site-wide costs of running the job, and only then applying margin and contingency on top.
The alternative — pricing the whole job as one gut-feel number, or scaling a similar past job without checking the detail — is where underquoting starts. A measured, itemised build-up is slower to produce by hand, but it is the only reliable way to know your price actually covers the work in front of you.
Step 1: Start from a measured takeoff
Before pricing anything, measure the works from the drawings into quantities — the takeoff. Every cubic metre of concrete, square metre of lining and lineal metre of pipe becomes its own line item, so nothing gets priced twice and nothing gets missed.
This is the foundation the rest of the price sits on: if the takeoff is wrong or incomplete, every rate you apply on top of it inherits the same error. My Trade Hub performs this takeoff automatically from your uploaded plans, which is designed to prepare it 60-75% faster than measuring by hand.
Step 2: Price materials and labour
For each measured item, price the materials at current supplier cost and the labour hours needed to install them at your labour rate. Add any plant or equipment the item requires, such as hire of an excavator or scaffold for a specific section of the works.
- Materials — price at current supplier cost, including wastage and delivery.
- Labour — hours to install, at the full on-cost rate rather than the base wage.
- Plant and equipment — hire, fuel and operator costs for anything beyond hand tools.
- Subcontract items — a quoted price from the relevant trade, where you are not self-performing the work.
Common mistake
Pricing labour at the base hourly wage alone. Superannuation, workers’ compensation insurance, leave loading and site allowances all sit on top of the wage — leaving them out understates your true labour cost on every item that uses that rate.
Step 3: Add preliminaries
Preliminaries are the site-wide costs of running the job that are not tied to any single trade item — site sheds and amenities, scaffolding, supervision, temporary services, insurances and cleaning. They are easy to under-price because they are not obvious when you are focused on trade quantities.
Most preliminaries are time-related, so they scale with how long the job runs rather than how much trade work is involved. An accurate program is therefore essential to pricing prelims correctly — the longer the job takes, the higher the prelims, regardless of the trade quantities.
Step 4: Add margin and contingency
On top of the measured cost you add your margin — your profit and overhead recovery — and, where the job carries genuine risk, a contingency for the unknowns. There is no single correct figure for either: they should reflect your own overheads, the type of work, and the specific risks of the job in front of you, not a fixed industry rule of thumb.
The worked example below shows how these pieces stack up on a simplified job. The margin and contingency figures here are illustrative only — set your own from your actual overheads and the risk profile of the job.
| Cost element | Amount |
|---|---|
| Materials | $142,000 |
| Labour | $98,500 |
| Plant & equipment | $12,300 |
| Preliminaries | $27,800 |
| Subtotal (cost) | $280,600 |
| Margin (illustrative) | $42,090 |
| Contingency | $8,400 |
| Total price | $331,090 |
Fixed price vs cost-plus pricing
Most residential and many commercial jobs are priced as a fixed price (lump sum): the client pays the total build-up above regardless of your actual cost, so the risk of getting the estimate wrong sits with the builder. This rewards a careful, measured takeoff, since every missed item comes straight off your margin.
A cost-plus arrangement instead charges the client your actual costs plus an agreed margin, which shifts more of the estimating risk to the client but requires open-book cost tracking and trust in the relationship. The choice affects how much weight a precise takeoff carries — under fixed price, it is everything.
Common pricing mistakes that cause underquoting
Underquoting almost always traces back to one of a handful of causes: pricing from a rushed or incomplete takeoff, under-pricing preliminaries, using labour rates that do not reflect full on-costs, or leaving out a contingency on a job that clearly carries risk.
Checking your build-up against a recently completed, similar job is a useful sanity check — if the new price looks unusually low for a comparable scope, it is worth re-checking the takeoff before you submit rather than after you win the work.
How My Trade Hub helps you price a job
My Trade Hub’s estimation engine measures a takeoff directly from your plans and builds it into a structured, priced Bill of Quantities, so materials and labour are costed against every measured item rather than estimated as a lump sum.
Preliminaries, margin and contingency stay as their own editable line items, so you can apply your own figures and see exactly how they affect the total price before you quote. My Trade Hub is designed to prepare a priced job 60-75% faster than doing it manually, with no lock-in contracts.
Frequently asked questions
How do you price a building job?
Build the price up from a measured takeoff: materials and labour for each item, plus plant, then add preliminaries (the site-wide costs), your margin, and a contingency for risk. Pricing from measured quantities, rather than a gut-feel lump sum, is what stops you underquoting.
What margin should a builder add?
There is no universal figure — a builder’s margin varies with the type of work, the risk, and market conditions. Many builders work to a margin somewhere in the range of roughly 10-20% on top of cost, but the right number depends on your overheads and the job. Set it from your own costs, not a rule of thumb.
How do you avoid underquoting?
Price from a measured takeoff rather than a gut-feel lump sum, include preliminaries and a contingency, and check your labour hours and rates reflect full on-costs. Automated takeoff tools like My Trade Hub reduce the missed items that cause under-pricing.
What is the difference between a fixed price and a cost-plus contract?
A fixed price (lump sum) contract charges the client one agreed total, so the builder carries the risk of an inaccurate estimate. A cost-plus contract charges the client actual costs plus an agreed margin, shifting more of that estimating risk to the client in exchange for open-book cost tracking.
How do you price labour on a building job?
Price the hours needed to install each measured item at your full labour rate — the base wage plus on-costs like superannuation, workers’ compensation insurance, leave loading and any site allowances. Using the wage alone understates the true cost of labour.
Should every quote include a contingency?
Not necessarily a fixed percentage on every job, but any job with genuine unknowns — existing conditions that cannot be fully verified, a tight program, or unfamiliar work — should carry a contingency sized to that specific risk rather than being priced at bare cost plus margin alone.
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