How to price a quote so the job pays in the UK

GuideUKChecked 29 October 202617 primary sources8 min readUS version

The short answer

In the UK, price from your own costs: loaded labour cost divided by utilisation, plus overheads per billable hour, divided by one minus your target margin. Then put it in writing: price ex VAT, VAT and total, deposit and stages, how long the price holds, and, for a consumer job agreed at their home, the 14-day cancellation notice.

How do I work out an hourly rate that pays?

Build it from the hours you sell, not the hours you pay for. Cost per billable hour is your loaded hourly labour cost divided by utilisation, plus your overheads divided by your billable hours.

Loaded cost is basic pay plus employer's National Insurance, pension and holiday. Utilisation is billable hours over paid hours: travel, merchant runs, quoting and callbacks are all paid and none of them is billed, which makes utilisation the lever owners miss.

Three-engineer firm, worked through (indicative, As of Oct 2026)Figure
Loaded cost: £18.00 basic plus 25% on-cost£22.50 an hour
Billable hours: 3 x 2,000 paid hours x 65% utilisation3,900
Labour per billable hour: £22.50 / 0.65£34.62
Overheads per billable hour: £180,000 / 3,900£46.15
Break-even per billable hour£80.77
Rate for a 20% net margin: £80.77 / 0.80£100.96

Cross-check: 3,900 hours at the unrounded rate bring in £393,750 against £135,000 of labour and £180,000 of overheads (vans, fuel, insurance, software, the office and the owner's salary), a profit of £78,750, or 20.0%. Every input is an assumption: your own job costing replaces it.

What is the difference between margin and mark-up?

Margin is profit as a share of the price; mark-up is profit as a share of cost. A 25% mark-up is only a 20% margin.

In the example, £100.96 less the £80.77 cost leaves £20.19: 20% of the price and 25% of the cost. To hit a target margin, divide cost by one minus the margin rather than adding the percentage to cost. Price parts from a book at cost plus a stated mark-up, on a separate line from labour.

Should my quote include VAT or show it separately?

If you are VAT-registered, show both: the price ex VAT, the rate and the reason it applies, the VAT and the total. Registration is compulsory once VAT taxable turnover passes £90,000 in any rolling 12 months, or will pass it in the next 30 days alone (VAT Act 1994 Sch 1). As of Oct 2026.

  • The standard rate is 20% (As of Oct 2026). Some building work is 5%, such as renovating a home empty for at least 2 years or converting a non-residential building into homes (Sch 7A, As of Oct 2026), and building a new home is 0% (Sch 8, As of Oct 2026). Settle the rate before you quote.
  • Indicative, As of Oct 2026: a £30,000 kitchen extension is £36,000 at 20%; the same value of barn conversion at 5% is £31,500. Quote £31,500 including VAT on work that is really standard-rated and the VAT is £5,250, not £1,500: £3,750 comes out of your margin.
  • For a consumer, an invitation to purchase must show the total price including unavoidable fees (Digital Markets, Competition and Consumers Act 2024 s.230). As of Oct 2026.

Is a quote the same as an estimate?

No. A quote is a fixed price for the stated scope; an estimate is a guide that can move, so say which you are giving.

What you say about the price binds you if the customer relied on it (Consumer Rights Act 2015 s.50), and where no price was agreed a consumer pays a reasonable one (s.51). State how long the price holds, such as 30 days. List what is included and what is not, how changes are priced and your payment terms (see chasing an unpaid invoice).

How much deposit can I take?

Size the deposit to the costs you commit, such as materials ordered or a start date you hold. In a consumer contract, a large non-refundable deposit can be challenged as an unfair term if it is out of proportion to your loss (Consumer Rights Act 2015 s.62 and Sch 2).

On longer jobs, ask for stage payments tied to parts of the work. Under a business construction contract you have a right to stage payments unless the contract specifies, or you agree, that the work will last under 45 days (Housing Grants, Construction and Regeneration Act 1996 s.109). As of Oct 2026.

Can a customer cancel a quote they agreed at home?

Usually, yes. A consumer who agrees a job at their home (off-premises), or by phone, email or online without meeting you (distance), can cancel within 14 days from the day after the contract is made (Consumer Contracts Regulations 2013, regs 29 and 30); a contract agreed at your premises carries no such right.

  • Give the cancellation information and model form on paper or another durable medium (reg 10, Schs 2 and 3). Without them the period runs up to 12 months longer (reg 31), and on an off-premises contract leaving them out is an offence (reg 19).
  • Start inside the 14 days only if the customer expressly asks, on a durable medium for an off-premises job. If they then cancel they pay a proportionate amount; if you started without the request or the information, they pay nothing (reg 36).
  • Refund what is due, deposit included, within 14 days of being told (reg 34). Materials you bought stay your cost.
  • An urgent repair the customer asked you to visit for has no cancellation right, but extra work sold on that visit keeps it (reg 28(1)(e) and (2)). Off-premises contracts of £42 or less are outside the information and cancellation rules (regs 7(4) and 27(3)). As of Oct 2026.
£3,000 repaint agreed at the kitchen table, £600 deposit, cancelled on day 5 (indicative, As of Oct 2026)Amount
No express request, no work started: refund£600
Signed express request, 1 of 6 days done: £3,000 x 1 / 6 owed£500
Refund in that case: £600 less £500£100

The Academy covers selling a new boiler on a repair visit, a plumber's charge-out rate and a consultant's day rate.

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Questions owners ask

How do I work out my hourly rate?

Divide your loaded hourly labour cost by utilisation, add overheads divided by billable hours, then divide by one minus your target margin. In an indicative example, £34.62 of labour and £46.15 of overheads give £80.77 to break even and £100.96 for a 20% margin. As of Oct 2026.

What is the difference between margin and mark-up?

Margin is profit over price; mark-up is profit over cost. A 25% mark-up gives a 20% margin, so adding 20% to cost does not give you a 20% margin.

Should my quote include VAT?

If you are VAT-registered, show the price ex VAT, the rate and why it applies, the VAT and the total. Registration is compulsory once VAT taxable turnover passes £90,000 in any rolling 12 months (VAT Act 1994 Sch 1). As of Oct 2026.

How long should a quote be valid for?

Choose a period, such as 30 days, and state it on the quote, so the customer knows when the price can change.

Can a customer cancel a job they agreed at their home?

Usually, if they are a consumer: they have 14 days from the day after the contract is made (Consumer Contracts Regulations 2013, regs 29 and 30). An urgent repair they asked you to visit for is an exception. As of Oct 2026.

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