Pricing is where construction arbitrage businesses are quietly won or lost. Win the job at the wrong number and you've bought yourself a month of stress for nothing. This guide makes sure that never happens.
(All figures below are in USD - the model and the maths are identical in any currency.)
Build the quote from the ground up
Never pluck a number from the air, and never start from "what will they pay?" Start from what the job actually costs, then add your margin on top. Every quote has four layers:
- Labour. What your subcontractor will charge - confirmed with them before you quote, never guessed. Get it in writing or a text.
- Materials. Priced from an actual supplier, plus a sourcing markup (commonly 10-20%).
- Job costs. Skip hire, waste removal, parking, access equipment, permits - the stuff beginners forget that eats margin alive.
- Your margin. Added on top of the full cost above, not baked vaguely into a round number.
If you skip straight to a round figure, you're gambling. Build it in layers and you'll know your real margin to the pound before you ever send the quote.
The contingency line that saves you
Always add a contingency - typically 5-10% of the total cost - for the things you can't see at quote time. Hidden damp behind the plaster. A floor that isn't level. A client who "just adds one more thing." On a renovation, something will surprise you. The contingency is the difference between absorbing a surprise calmly and watching your entire profit vanish into it.
If the job runs clean and you don't need it, the contingency becomes extra margin. Either way you win.
The margin mistakes that bankrupt operators
These are the quiet killers. Every one of them feels harmless in the moment.
- Quoting before confirming the trade's price. You guess $4,000 for labour, the plumber says $5,200 after seeing it, and your margin is gone before you started.
- Forgetting the invisible costs. Skips, waste, deliveries, parking - $600 of "small stuff" that nobody quoted for.
- Discounting out of fear. Knocking $1,000 off to "make sure you get it" - straight out of your pocket, every time.
- Underpricing your first jobs to win them. Tempting, but it sets a reference price you'll fight forever, and it attracts the worst clients. Price fairly from day one.
- Treating gross margin as profit. Spending the markup before overheads and tax come out. See How Much Money Can You Make for why half of gross is a safer mental model.
How to hold your number under pressure
The client will push. Good ones test you; bad ones bully you. Holding your margin is a sales skill, not a stubbornness contest:
- Anchor on value, not price. "This covers the work, the materials, and a single company standing behind the result, finished by [date], guaranteed." You're not the cheapest - you're the safest. Sell that.
- Never drop price without dropping scope. Every discount must cost the client something. "I can hit $8,000 if we use the standard suite instead of the premium one." The margin stays intact; the job got smaller.
- Be willing to walk. The single most powerful pricing tool is genuine willingness to lose the job. Clients feel it. A no-margin job is a liability you're paying to take on.
- Quote in writing, fast, and confidently. A slow, hedged, apologetic quote invites haggling. A fast, clean, certain one commands the price.
Price is what you say first. Margin is what you protect last. Most operators get the first right and surrender the second under the smallest pressure.
A clean worked example
Office meeting-room refurb:
| Layer | Amount |
|---|---|
| Subcontract labour (confirmed with trades) | $6,000 |
| Materials + 15% sourcing markup | $4,600 |
| Skip, access, waste | $500 |
| Contingency (7%) | $780 |
| Total cost | $11,880 |
| Margin (25% on total cost) | $2,970 |
| Price to client | $14,850 |
You present one number - $14,850, fully finished, guaranteed, done by the agreed date. Not a breakdown. One clean, confident figure for a finished outcome. That's how you win the job and keep the margin.
Now make sure that margin actually reaches your bank account before you have to spend it - read Cash Flow: Getting Paid Before You Pay.
Frequently asked questions
Should I tell the client my cost price?+
No. No business reveals its cost price - a shop doesn't tell you what it paid the wholesaler. You present one inclusive price for the finished outcome. What the client is buying is the result and your guarantee, not a line-by-line breakdown of your margin.
How do I handle a client who wants a cheaper price?+
Don't cut your margin - change the scope. Offer a smaller package, cheaper materials, or fewer extras for the lower number, so the discount comes out of the job, not your pocket. If they still want champagne on a beer budget, let them walk. A job priced with no margin is worse than no job.
What markup should I add to materials?+
A common range is 10-20% on materials to cover your time sourcing, ordering, delivery co-ordination and the risk of waste or breakage. Some operators price materials at cost and take all margin on labour co-ordination; either works as long as the total margin on the job is healthy.
Mohamed El HadriCo-Founder
I'm a co-founder of several construction companies. I built a construction business from a 30-van operation into a lean model with 1,400+ subcontractors in the database - winning the work as the main contractor, subbing it out, and running it as a system from a laptop across multiple countries. I write this site from what actually works.
@mointhemarket · 30k followers on Instagram →Run the model with people who already do
Reading the method is step one. When you want the operators who run construction arbitrage every day, join the Construction Arbitrage Players community. For the operator life, the events and the inside story, see Contractor Club.
The Family Secret - how construction arbitrage really works - is coming soon.
A construction business built this way is a sellable asset
Systems, subs and margin - that is exactly what buyers pay for. If you own a construction or trade business and the exit is on your mind, list it on ContractorExit, the marketplace for buying and selling trade businesses. The valuation is free, so you find out what it is worth before you decide anything.
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