The lads recently sat down with Maria Coulter, award-winning business coach, founder of Construction Coach and the brilliant platform Solving Construction, to talk about something that every construction business owner should be paying attention to.
Pricing jobs properly and actually making a profit.
Drawing on decades of experience working with small construction companies across the country, Maria shared some valuable advice about why so many builders find themselves working harder than ever, yet struggling to see the financial rewards.
And it turns out that one of the biggest problems isn’t necessarily a lack of work. It’s how we’re pricing the work in the first place.
Why So Many Construction Businesses Are Busy but Not Profitable
Running a construction business is expensive. We all know that.
Between labour costs, materials, insurance, vehicles, equipment and the never-ending list of overheads, there’s constant pressure to keep costs down and win the next job.
But there’s a silent profit killer affecting construction businesses of all sizes, something Maria calls the ‘hope-based pricing model’.
Sound familiar?
You estimate what a job is going to cost, add a bit on for luck, send the quote over and hope that by the time the work is finished, there’s enough money left in the bank to pay yourself.
It’s hardly the most scientific approach to running a business, is it?
Yet it’s surprisingly common.
The problem is that being busy doesn’t necessarily mean you’re making money. You could have a full order book, a team working flat out and thousands of pounds coming through the business, but still find yourself wondering where all the profit has gone at the end of the month.
If that sounds familiar, the issue might not be how hard you’re working.
It might simply be that your pricing doesn’t reflect what your jobs are actually costing you.
Revenue and profit are two very different things. And until you understand exactly where your money is going, you’re essentially gambling with your own time, effort and financial future.
How to Price Construction Jobs More Accurately
So how do you stop guessing and start pricing construction work properly?
According to Maria, one of the first things construction business owners need to understand is the difference between what they think a job will cost and what it actually costs to deliver.
And a big part of that comes down to productivity.
1. Stop Pricing Jobs Based on Best-Case Scenarios
One of the biggest mistakes builders make when estimating construction jobs is assuming everything will go perfectly.
The weather will behave itself, materials will arrive on time, subcontractors will turn up when expected and every task will take exactly as long as planned.
Lovely idea. Shame construction rarely works like that.
Let’s say you quote a job based on three days of labour, but it ends up taking your team six.
You’ve now doubled your labour time against the original estimate. Depending on your costs and pricing, that could wipe out your expected profit entirely before you’ve even considered the materials.
That’s why your construction pricing needs to reflect the realistic productivity of the people doing the work.
Not what you hope they’ll achieve. Not what someone on another site reckons they can do. And certainly not what you managed to achieve once, three years ago, when absolutely everything went to plan.
You need to know how long tasks actually take.
Start tracking your team’s output, comparing estimated labour hours against actual hours worked and using that information to improve future quotations.
Because if you don’t measure productivity, you can’t properly manage your margins.
And while you’re looking at productivity, don’t forget the hours spent managing your workforce behind the scenes.
Onboarding subcontractors, collecting documentation and keeping employment records organised can all eat into valuable time. That’s where HardHats Connect can help, simplifying subcontractor onboarding and administration so you can spend less time chasing paperwork and more time running your business.
2. Calculate Your True Construction Business Overheads
Here’s another area where construction companies regularly lose money without even realising it.
Overheads.
Most business owners remember the obvious expenses. Insurance, fuel, vehicle hire, equipment and wages.
But what about everything else?
The software subscriptions, phone bills, accountancy fees, replacement tools, office expenses and the hours you spend quoting for jobs that you never actually win?
All those little costs add up.
And whether you like it or not, somebody has to pay for them.
If you’re not accounting for these expenses when pricing construction jobs, that somebody is probably you.
Your hourly rates, day rates and project quotations need to cover more than just the labour and materials required to complete the work.
They also need to contribute towards the actual cost of keeping your business running.
For example, if your overheads represent 20% of your turnover but you’re only allowing for 10% when pricing jobs, you’re creating a shortfall before the work has even started.
That’s money coming directly out of your potential profits.
The solution is to get a proper understanding of your business costs and build them into your pricing calculations.
Don’t just look at what it costs to complete a job.
Look at what it costs to operate the business that’s completing the job.
That includes the administration involved in managing subcontractor payments, CIS deductions and financial processes.
Solutions such as HardHats Direct can help construction companies simplify subcontractor payments and reduce the administrative burden associated with managing their workforce.
Because time spent sorting paperwork is still time that costs your business money.
3. Understand the Difference Between Markup and Profit Margin
This is another area where construction business owners can easily come unstuck.
Markup and profit margin aren’t the same thing.
If a job costs you £10,000 and you add a 20% markup, you’ll quote £12,000.
That gives you £2,000 above your estimated costs.
But your actual profit margin on the selling price is only 16.7%, not 20%.
And that’s assuming you’ve included all your costs in the first place.
If you’ve missed overheads, underestimated labour or failed to allow for unexpected expenses, your actual profit could be considerably lower.
Understanding the difference is important because it allows you to set prices based on the profit you actually want to achieve, rather than simply adding an arbitrary percentage and hoping for the best.
What Should Your Construction Profit Margin Actually Cover?
Here’s where Maria’s advice becomes particularly important.
Running your own construction business shouldn’t just be about surviving until the next invoice gets paid.
You’ve taken on the risks, the responsibilities and the headaches that come with being a business owner.
Surely there should be some reward for all that?
And we’re not just talking about having enough left over to buy yourself a few pints on Friday.
We’re talking about building a business that supports the life you actually want to lead.
So ask yourself a few questions.
Are you factoring in your own pension contributions, or are you planning on working on building sites until you’re 80?
Have you considered your longer-term financial goals, whether that’s supporting your family, helping your children through university or building some financial security for the future?
Are you generating enough profit to invest back into your business, employ more people and take on bigger opportunities?
And perhaps most importantly, are you putting enough money aside to survive the inevitable quieter periods?
Because anyone who’s been in construction long enough knows the industry has its ups and downs.
A profitable construction business needs to be able to withstand those fluctuations without every quiet month turning into a financial emergency.
Pricing for profit isn’t about being greedy. It’s about making sure the risks you’re taking as a business owner are actually worth the reward.
Stop Competing on Price and Start Selling Your Value
Of course, knowing what you should charge and having the confidence to actually charge it are two different things.
And this is where mindset becomes incredibly important.
If you’ve convinced yourself that customers will only choose the cheapest builder, you’re already setting yourself up for a race to the bottom.
There’s always going to be someone willing to do a job for less.
But that doesn’t necessarily mean they’re delivering the same value.
Your experience, reliability, workmanship, professionalism and ability to deliver projects properly are all worth something.
Customers aren’t just paying for bricks, mortar and labour.
They’re paying for someone they can trust to get the job done.
And that’s something you need to communicate clearly.
Maria’s advice is to understand your core values and make sure they’re reflected in how you position your business.
When you can confidently explain why your company is worth the money, the conversation starts to shift away from simply being the cheapest option.
Instead of being another builder competing for work, you become a professional business owner offering a service with genuine value.
And there’s a big difference between the two.
Protecting Your Construction Profits Goes Beyond Pricing
Getting your quotations right is a huge part of building a profitable construction company.
But there’s another side to protecting your profits that business owners can’t afford to ignore.
Risk.
Construction businesses face increasingly complex responsibilities around subcontractor management, employment status, tax compliance and supply chain arrangements.
And getting those things wrong can be expensive.
You might price every job perfectly, manage your labour costs carefully and maintain healthy margins, only to find those profits threatened by an unexpected compliance issue.
That’s why protecting your business should be part of your wider financial strategy.
HardHats Protect is designed to help construction companies manage subcontractor compliance risks through structured processes and insurance-backed protection.
Because making money is one thing.
Making sure you get to keep it is another.
Five Practical Steps to Improve Your Construction Profit Margins
So, what can you actually take away from Maria’s advice and start putting into practice?
Here are five things worth reviewing in your construction business.
- Track your actual labour productivity. Compare estimated hours against the time jobs really take and use that information to improve future quotations.
- Calculate your complete overheads. Include everything required to operate your business, not just the obvious expenses.
- Set a realistic target profit margin. Understand the difference between markup and margin, and price your work to deliver the financial return your business needs.
- Communicate your value. Stop assuming that being the cheapest is the only way to win work. Give customers a reason to choose your business based on quality, reliability and expertise.
- Protect the profits you’re working so hard to make. Review your subcontractor management, payment processes and compliance responsibilities to reduce avoidable financial risks.
None of these changes requires you to completely reinvent your business overnight.
But getting into the habit of measuring, reviewing and improving how you price and deliver work can make a significant difference over time.
It’s Time to Stop Guessing and Start Pricing for Profit
The message from our conversation with Maria Coulter was pretty simple.
If you’re constantly busy but struggling to make a decent living from your construction business, something needs to change.
And taking on more work isn’t necessarily the answer.
Sometimes the most important thing you can do is understand whether the work you’re already doing is actually making you any money.
Get a proper grip on your overheads. Measure your team’s productivity. Understand your margins and have the confidence to charge what your expertise is worth.
Because you didn’t start your own construction business just to work longer hours, take on more stress and earn less than you could working for somebody else.
You started it to build something worthwhile.
And that business should be working for you, not the other way around.
A big thanks to Maria Coulter from Construction Coach and Solving Construction for sharing her experience and insights with the HardHats team.
If you’re looking to improve the way you manage your subcontractors, reduce administration and protect your construction business from compliance risks, explore how HardHats can help.
Stop guessing. Start measuring. And make sure every job you take on is helping you build a more profitable business.