Three Questions That Tell You If a Quote Is Profitable Before You Send It
Most businesses check a quote for accuracy before sending it. These three questions go further - they check whether the quote will actually generate profit once every cost is included and the job runs as jobs typically do.
Most businesses check a quote for accuracy before sending it - are the prices right, is the spec complete, does it total correctly? That is a useful habit, but it answers a different question from the one that matters: will this job actually make money? Here are three questions to ask before the quote goes out.
Have You Included Every Cost, or Just the Obvious Ones?
Direct costs are easy to see. Materials, labour, any sub-contractors you plan to bring in - these show up clearly in a well-built quote. What tends to get missed is everything else the job will consume: your own time managing the account, pre-start site visits, admin, travel, follow-up calls, and the slice of your fixed business costs that this job needs to recover.
For contractors, overheads typically account for 10 to 20 percent of total project costs depending on business size and structure, according to overhead guidance published by RapidQS in 2026. Smaller firms with lower fixed costs sit toward the lower end; businesses with more staff and premises sit higher. If you build a profit margin on top of direct costs only - without recovering overheads - you are subsidising your own running costs on every job without realising it.
A practical fix: add an overhead recovery line to your quoting process as a percentage of direct costs. Use your own historical figures rather than an industry average. If you have never calculated it, divide your total annual business costs (excluding direct project costs) by your projected annual billable revenue. That percentage belongs in every quote you send.
Owner salary counts
If you are a director or sole trader who does not charge your own time to projects as a direct cost, your salary belongs in your overhead calculation. Leaving it out means the quote is quietly consuming your margin before the job even starts.
What Is Your Worst-Case Margin If This Job Runs Even Slightly Over?
Most quotes are built around the job as you expect it to go. That is optimistic by design. In practice, labour takes longer than planned, a supplier sends the wrong item, the customer calls to change something, and someone spends two hours on a problem that was not in the scope.
Before you send, run a quick sensitivity check: if this job takes 15 percent more labour hours than you have quoted for, what does your margin become? If the answer is negative, the quote carries no buffer for normal operational friction. That is not automatically a reason to walk away - some jobs are worth taking at thin margin for the right reasons - but it should be a deliberate choice, not something you discover when you close out the job.
This matters most on fixed-price work with a high labour element, where overruns come entirely from your margin. On supply-heavy orders where materials dominate, the risk profile is different. The point is to understand which type of job you are quoting before you commit to a fixed number.
Contingency is not padding
A 5 percent contingency on a job where labour is half the cost and your historical overrun rate is above zero is not inflating the price. It is pricing the job accurately. Customers who question it deserve an honest explanation of why it is there.
What Does This Customer's History Tell You?
Not all customers cost the same to serve, even when the work looks identical. A customer who requires three rounds of quote revisions, involves multiple decision-makers asking different questions, expects extras that were never in the original scope, and pays 30 days after the agreed terms is more expensive than their invoice value suggests.
Before you send, ask: has this customer accepted a price on the first review before, or do they always negotiate down? Have previous jobs run to scope, or do they consistently expand? Are there costs that emerged last time that you absorbed because it felt too awkward to charge? A UK financial management advisory noted in May 2026 that a customer who looks valuable by revenue may be weak by margin once delivery time, support requirements, and uncharged extras are included.
If this is a new customer, you have less data to draw on - but that itself is information. A modest contingency on a first job with an unknown buyer is not pessimism. It is prudent pricing until you know what working with them actually costs.
A quote that passes these three checks is not a guarantee of profit. Once a job is running, there are always variables. But a quote that fails any of them is a problem you can still fix before it leaves your desk. Once the customer has accepted it, the number is locked. The only moment you have to adjust it is now.
Sources
- What Are the Biggest Pricing Mistakes SMEs Make?CH4B · accessed 2026-08-07
- Contractor Overhead Calculations - How to Price Your True CostsRapidQS · accessed 2026-08-07
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