Contractor’s Guide to Pricing for Profit & Payments

You take pride in your craft, and you’re really good at it, too.

But if your pricing doesn’t reflect all your hard work, your business suffers.

Having a solid foundation in pricing is the first step toward pricing for a sustainable profit. When your prices truly reflect what it takes to get the job done—from materials and labor to time and overhead—you set your business up for long-term stability.

Pricing isn’t just about covering costs; it’s about building a system that supports the way you work and helps your business run smoothly.

Here’s how to build a pricing strategy that protects your profits and keeps your business going.

1. Start with a Solid Pricing Foundation

Before you send your next estimate, take a moment to look at how you set your prices. A solid foundation starts with understanding your true costs—everything from materials and labor to insurance, tools, and admin time.

Evaluating your pricing strategy isn’t about charging more; it’s about charging the right amount. When you know what it really takes to complete a job, you can price in a way that keeps your business strong and sustainable.

Looking for a place to start? Make a checklist of every expense that goes into your typical job, and keep it updated. If you replace a tool, renew a license, or add software to your workflow, it should be part of your pricing. That’s how you make sure your prices grow with your business.

2. Cover Every Cost with Cost-Plus Pricing

Contractor checking supply costs on tablet

Once you’ve mapped out your costs, the next step is turning them into a formula you can rely on.

It’s easy to think pricing is just materials + labor, but that leaves out many behind-the-scenes costs that keep your business running. Not accounting for these costs is one of the most common reasons pros end up frustrated, or lose money without realizing it.

That’s where cost-plus pricing comes in. Whether you charge hourly or by project, it helps you cover every cost and add a reasonable markup.

Here’s the formula:
Materials + Labor + Overhead + Markup = Your Price

Overhead includes all those business expenses you have that don’t get billed directly to a job. So things like insurance, tools, vehicle costs, advertising, and software count here. Learn more about how to calculate overhead expenses.

And keep payment processing fees in mind, too. If you accept online payments, those fees are simply another cost of doing business. Many pros build those fees right into their pricing to protect profits while giving customers the flexibility and convenience of paying however they prefer.

Your markup then builds on top of those costs to make sure you’re earning what your work is worth. It’s your profit margin, and it’s what you need to build a strong and sustainable business.

3. Explore Other Ways to Set Prices

Once your costs are covered, it’s worth exploring other ways to price your work—especially if you want to adjust for demand, offer options, or highlight the extra value you bring to each job.

Every business is different, and the right pricing approach can depend on what kind of work you do, how competitive your market is, and what customers value most.

Here are some other pricing strategies to try:

Value-based pricing: Sets your price based on what customers see as valuable, like quality, speed, or expertise. This approach works best when your craftsmanship or turnaround time clearly stands out.
Tiered pricing: Offers “good/better/best” packages so customers can choose what fits their needs. It’s a great way to make your services accessible to more clients without lowering your profit margins.
Dynamic pricing: Adjusts rates for busy seasons, rush jobs, or specialty projects. Building flexibility into your pricing helps you stay competitive year-round.

Cost-plus pricing is a great place to start, but it doesn’t have to be where you stop. These approaches give you room to experiment, understand your customers better, and price your work in a way that reflects its true value. And as you try new strategies, you can use your cost-plus price as a baseline to check that your rates still cover every cost and protect your margins.

RELATED ARTICLE: What Is Value-Based Pricing?

4. Talk About Pricing and Payments Early

Carpenter in workshop in front of laptop talks on phone

Talking about money isn’t always easy, but clear communication builds trust and keeps projects running smoothly. Setting expectations from the start helps customers feel confident, prevents misunderstandings, and makes payment collection much simpler.

Here are a few ways to make pricing and payment conversations easier for everyone:

Be clear about costs early.

Share detailed estimates that include everything—materials, labor, and any other expected expenses—so customers know what to expect from the beginning.

Send invoices and reminders promptly.

Timely communication helps avoid confusion or delays. Here’s how to send a friendly payment reminder.

Make paying easy.

Offering online payment options makes it simple for customers to pay right away and keeps your cash flow steady.

Communicate changes with care.

If your costs go up, don’t be afraid to adjust your rates. Just explain why, be transparent about timing, and give customers a heads-up. Here’s a guide to communicating price changes.

When customers understand your pricing and payment process, it reinforces your professionalism and credibility. And it makes every job run smoother from estimate to final payment.

5. Offer Flexible Ways to Pay

Once your pricing and payment terms are clear, the next step is making it just as easy for customers to pay.

When paying is simple, everyone wins. You get paid faster, customers feel more comfortable, and your business looks more professional. Offering multiple payment options is one of the easiest ways to stay competitive and build customer loyalty.

Here’s how it pays off:

Make customers happy. When people can pay their way—whether that’s by card, cash, or bank transfer—it builds trust and satisfaction.
Build loyalty. A simple, convenient payment process keeps customers coming back and recommending you to others.
Stay competitive. Flexibility helps you stand out and win the next job, especially with customers who prefer digital options.
Offer flexibility. Payment options like Homeowner Financing or Pay Later help customers move forward with projects that fit their budget while helping you win more jobs.

Whether it’s card, cash, check, bank transfer, or a digital option, giving customers choices makes getting paid simple—and you can manage it all right in Joist.

6. Make Online Payments Work for You

Contractor in work space looking at laptop

Accepting online payments is good for business. You get paid faster, reduce late payments, and give customers the convenience they expect.

Every payment method comes with costs, whether it’s time or money. For online payments, that means processing fees. But the good news is: you don’t have to cover them out of your own pocket. With a solid pricing approach in place, you can keep profits protected and still offer the easy payment options customers prefer.

Here are three simple ways to do it:

Build it in. Factor processing fees into your pricing, just like you would with materials or overhead. This way, you’ve already accounted for these costs, so if a customer pays online, your profit isn’t affected.
Pass it on. Turn on Joist’s Cover Payment Processing Fees feature to automatically add fees to customer invoices. It’s quick to set up and ensures you never absorb those costs yourself.
Stay flexible. Keep all payment options open. When you’ve already accounted for processing fees in your pricing, you’ll earn a little extra when customers pay by cash or check. You’ve earned it. And customers will appreciate having the choice.

However you set it up, online payments help your business run smoothly, strengthen customer relationships, and keep your profits right where they belong—with you.

Bring It All Together: Profitable Pricing and Fast Payments

When your pricing reflects the true cost of your work, it’s easier to offer fast, convenient payment options without cutting into your profits. The two go hand in hand: strong pricing keeps your business sustainable, and easy payments keep it running smoothly.

Learn more about how Joist Payments can help you get paid faster while keeping your profits protected.

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The Contractor’s Guide to Pricing for Sustainable Profit (& Easy Payments)