Pricing guide
How to price a building job
A dependable price starts with a clear scope. Work through the job in sections, price the resources required and make uncertainty visible.
Short answer
Start with a clear scope and list the information and assumptions used to price it. Price each part of the job, including labour, materials, subcontractors and plant. Then add the cost of running the job, business overhead, known risks and profit. Apply the correct VAT treatment, keep provisional sums separate and show anything that could change the final price.
Quick check
- Freeze the scope and drawing revisions
- Measure each work package
- Price delivered materials and realistic waste
- Price labour from task time, not a guessed total
- Use written subcontractor and plant prices
- Add preliminaries and allocated overhead
- Separate risk, provisional sums and profit
- Check VAT, cash flow and arithmetic
1. Record what the price is based on
List the information you relied on: site visit date, drawings and revisions, specification, client choices and any written clarifications. Then state access, working hours, protection, waste, making good, approvals and client-supplied items.
If the scope is not settled, do not disguise that uncertainty with a precise-looking total. Resolve it, exclude it or identify a provisional allowance.
- Latest drawings and structural information
- Dimensions checked on site
- Specification and finish level
- Access, parking, storage and working hours
- Occupied-property protection and temporary services
- Design, approval and inspection responsibilities
2. Build the direct cost by work package
Price the job in the same order it will be built. This helps reveal gaps between trades and makes the price easier to check.
| Cost group | Include |
|---|---|
| Materials | Measured quantity, realistic waste, delivery, small sundries and current supplier price. |
| Labour | Task hours or days multiplied by the real cost of employing or supplying that labour. |
| Subcontractors | Written quotes that match the scope, any support you must provide and anything they exclude. |
| Plant and access | Hire period, transport, fuel, scaffold, lifting and temporary works. |
| Waste and testing | Skips, permits, disposal, commissioning, certification and handover. |
Check the work between trades
A subcontract price may exclude chasing, making good, scaffold, power, waste or other support. Decide who is responsible for every part before adding the figure to your quote.
3. Add the cost of running this job
Preliminaries are job-specific costs that support the work rather than belonging neatly to one finished element. They disappear from the margin if they are left as an afterthought.
- Supervision and site setup
- Welfare, temporary power and water
- Protection, cleaning and security
- Permits, parking and traffic arrangements
- Travel or accommodation where job-specific
- Hire and trade support needed for the programme
- Health, safety and compliance resources
4. Keep overhead and profit separate
Overhead is the share of running the business that the job needs to recover: office, vehicles, insurance, software, estimating time and management time that cannot be charged directly to a job. Profit is what remains for taking the commercial risk and building the business.
There is no reliable percentage that suits every business. Calculate your annual overhead from your own records and spread it across a realistic number of chargeable days. Then choose the profit the job needs.
Worked example
Markup is not margin
If cost is £100 and you add a 20% markup, the selling price is £120. The £20 gross profit is 16.7% of the £120 selling price, not a 20% margin.
5. Assemble the net price in a fixed order
Use the same build-up order on every job. Consistency makes omissions easier to spot and lets completed-job data improve the next quote.
Worked example
Cost build-up
Direct job cost + preliminaries + allocated overhead + identified risk allowance + profit = net selling price. Apply VAT afterwards using the treatment that actually applies to the work.
6. Do not mix provisional sums with contingency
| Term | Use it for |
|---|---|
| Provisional sum | Identified work that cannot yet be fully described or measured. State what information is missing and how the final value will be adjusted. |
| Risk allowance | A priced response to an identified uncertainty you are carrying. Record the risk and basis. |
| Exclusion | Work that is outside the price and will need separate agreement if required. |
| Profit | The commercial return, shown in your build-up rather than hidden inside an undefined contingency. |
State what a provisional sum covers
RICS guidance distinguishes defined and undefined provisional sums. Record the nature, location, quantity and limitations when they are known, and keep overhead and profit treatment explicit.
7. Check VAT from the actual work
Most work to existing houses and flats is normally standard-rated. Some qualifying new dwellings, conversions, empty-home renovations and disability-related work can receive different treatment. The conditions are detailed and fact-specific.
Do not infer the VAT rate from a job label. Check HMRC Notice 708 or confirm the treatment with your accountant before issuing the quote. Show net, VAT and gross totals clearly where VAT applies.
CIS is not a discount to the job cost
CIS deductions concern tax administration and cash flow between contractors and subcontractors. Price the actual work and keep the evidence HMRC requires rather than reducing the subcontract cost by the deduction rate.
8. Sense-check price, programme and cash flow
- 1
Reconcile
Check every subcontract quotation, material schedule and work package against the scope.
- 2
Compare
Use reliable completed-job records to challenge quantities and production time, not to force unlike jobs into a square-metre rate.
- 3
Cash-flow
Map deposits and stage payments against when labour, supplier, plant and subcontract bills fall due.
- 4
Save the basis
Keep supplier quotes, calculations and the issued version so later changes can be priced cleanly.
Sources and further reading
Primary and authoritative sources used to check this guide.
- Buildings and construction VAT Notice 708HM Revenue & Customs
- NRM 2: Detailed measurement for building worksRoyal Institution of Chartered Surveyors
- Managing health and safety in constructionHealth and Safety Executive
- CIS guide for contractors and subcontractorsHM Revenue & Customs
- Business records if you are self-employedGOV.UK
General information for UK residential building work, not tax, accounting, legal or quantity-surveying advice. VAT, consumer-contract and compliance treatment depends on the project and business. Confirm uncertain treatment with an accountant, surveyor, solicitor or relevant authority.