The Estimate Mistake That's Costing You Thousands

A study by Electrical Contractor Magazine found that the average trades business underestimates jobs by 12 to 18 percent. On a $5,000 job that is $600 to $900 walking out the door.

Do that 50 times a year and you are leaving $30,000 to $45,000 on the table.

The worst part? You did the work. You just did not charge for all of it.

Mistake 1: Guessing on materials

Most owners price materials from memory. They remember what a hot water tank cost last time and use that number. But supplier prices change constantly. Copper is up 23% since 2022. PVC fittings are up 15%.

Fix this by checking supplier pricing before every quote. Not last month's price. Today's price. Add 10% for waste and fittings you forgot. You will always use more material than you think.

Mistake 2: Not charging for drive time

If a job is 45 minutes away, that is 1.5 hours of round trip driving. Your truck costs $0.68 per kilometer in fuel, insurance, and wear. Your time has a dollar value too.

A plumber charging $120 per hour who drives 45 minutes each way is giving away $180 of billable time on every job. That adds up to thousands per month.

Build a minimum travel charge into every quote. Or include a flat service call fee that covers the first 30 minutes of drive time. Make it a line item so customers see it and accept it upfront.

Mistake 3: No buffer for callbacks

Every trades business has callbacks. Something leaks. A breaker trips. The customer calls and you go back for free.

The industry average callback rate is 5 to 8 percent. If you are not building that into your pricing, you are doing free work every single week.

Add a 5% margin buffer to every estimate. On a $3,000 job that is $150. You will never hear a customer complain about $150 on a $3,000 quote. But over a year that buffer covers every callback without eating your profit.

How to calculate your real cost per hour

Most trades businesses only count labour when they price a job. That misses half the cost of doing business.

Your real hourly cost includes: wages, WCB, insurance, vehicle costs, fuel, tools, software, rent, admin time, phone, and uniforms. Add all of those up for a month. Divide by the number of billable hours your crew actually works.

For most Canadian trades businesses, the real cost per hour is $65 to $95 even if you are paying a tech $30 per hour. If you are charging $85 per hour, you are barely breaking even.

Build estimates that protect your margin

Start with your real cost per hour. Add your target margin, usually 20 to 35 percent. Price materials at today's cost plus 10 percent. Add drive time. Add a 5 percent callback buffer.

Write it down in a price book so every quote follows the same formula. Stop guessing. The math is simple once you do it once.