You're busy, the work is good, clients are happy — but somehow the bank balance doesn't reflect it. Sound familiar? More often than not, the leak isn't in the work itself: it's in the quotes. Here are the five most common ways trade businesses lose money before a job even starts.
1. Not Costing Materials Properly
Many tradespeople estimate material costs from memory rather than checking actual prices. When material costs have risen (as they have significantly since 2022), this creates instant losses. A bag of cement, a roll of cable, a sheet of plasterboard — all of these have crept up in price, and quoting last year's rates means you're subsidising the difference.
The fix: build a quick material check into your quoting process. Take five minutes to verify current supplier prices for any material that makes up more than 5% of your job cost. It's tedious, but it's the difference between margin and loss.
2. Underestimating Labour Hours
The optimism bias is real. When you're quoting, you imagine the job going to plan — the wall is where you expect it, the timber is sound, the client is decisive. Reality is usually messier. Quotes based on best-case scenarios build in fragility from the start.
Force yourself to add 10–15% to labour estimates as standard. On any job with genuine uncertainty — old properties, complex retrofits, commercial premises — go to 20%. This isn't about padding; it's about pricing for the reality of the work, not a fictional perfect version of it.
3. Forgetting Overhead Allocation
Your van, your tools, your insurance, your accounting software, your phone bill — these are business costs that have to be paid regardless of whether a job goes well or not. Many trade business owners price as if overheads don't exist and then wonder why profitable-looking jobs don't translate into cash.
Calculate your total annual overhead cost and divide by your billable hours for the year. That gives you an overhead rate per hour. Add it to every job, every time.
4. Not Applying a Profit Margin
There's a common confusion between "not losing money" and "making a profit". If your quote covers materials, labour, and overheads exactly, you've broken even — and one unexpected problem puts you in loss. Profit is not what's left over; it's something you deliberately build into every quote.
Decide on a target net margin — typically 15–25% for trade work — and apply it consistently. A 20% margin on £3,000 of costs means quoting £3,600. That extra £600 is what funds growth, pays for bad weeks, and rewards you for the risk of running a business.
5. Pricing Against the Competition Rather Than Your Costs
When a client says "another company quoted me £X", the temptation is to undercut. But you don't know how the other company calculated their figure. They might be desperate for work, miscalculated, or operating at a loss. Competing on price against an unknown benchmark is a race to the bottom that no one wins.
Compete on value instead. A clear, detailed quote with a professional PDF presentation, itemised scope, and clear payment terms wins jobs over a vague low number from a competitor. Clients who only care about the lowest price are rarely the clients you want anyway.
The trade businesses that consistently make money are the ones that have disciplined, systematic quoting processes — not just good craft. Get the quotes right and everything else gets easier.
