Why fixed-price quotes are risky without a profit check
Unlike day-rate work, a fixed-price quote commits you to a price before the job is done. If you underestimate the costs, you absorb the difference. There is no renegotiation once the client has agreed the figure.
The problem is that most quotes are written based on gut feel or previous jobs — without a systematic check against actual costs. Materials fluctuate, jobs overrun, and overhead never disappears. A quote that seemed fine when you wrote it can easily turn into a loss by the time the job is complete.
A 5% underestimate on a £2,000 job is £100 lost. Across 40 jobs a year that is £4,000 — a significant hit to annual profit that most contractors never identify because they do not check each quote against costs.
What a quote profit calculator checks
A quote profit calculator takes the client price you plan to charge and subtracts every cost associated with delivering the job. The result tells you whether the job will be profitable — and by how much.
The key costs to include are:
- Materials — everything you will purchase specifically for this job
- Subcontractors — any labour you bring in to help
- Fuel and travel — site visits, deliveries, and travel time
- Equipment — hire costs or a usage allocation for owned equipment
- Overhead allocation — a daily contribution towards your fixed running costs (insurance, tools, software, vehicle)
- Overrun allowance — a buffer for jobs that take longer than estimated
How to check whether a quote is profitable — step by step
- Start with the client price. This is the total amount the client will pay, before VAT if you are VAT registered.
- List all direct job costs. Materials, subcontractors, fuel, equipment. Be precise — use supplier quotes where possible rather than estimates.
- Add an overhead allocation. Multiply your daily overhead cost by the number of days the job will take. This ensures every job contributes to your fixed costs.
- Add an overrun buffer. Add 5–10% to your estimated job duration to account for delays and scope creep.
- Calculate net profit. Client price minus all costs equals gross profit. Divide by days worked to get effective day rate.
- Compare to your minimum rate. If the effective day rate is below your minimum, the quote is underpriced and should be revised.
What RateCheck does differently
RateCheck is built specifically around the quote profitability problem. Rather than asking you to build a spreadsheet, it walks through each cost category for the job and compares the result against your personalised minimum rate — the rate that was calculated from your actual overhead and working pattern.
It also flags whether the job is loss-making, break-even, or genuinely profitable, and shows the minimum client price you would need to charge to reach your profit target. This means you can adjust your quote before sending it, not after.
RateCheck checks each quote before you send it — which is the only point at which you can still adjust the price.
Signs a quote is underpriced
- The client price has not changed in 12 months despite cost increases
- The job feels uncomfortable to quote higher than competitors
- Materials are a large portion of the total price but no markup is applied
- Previous similar jobs have regularly overrun without price adjustments
- The profit on paper disappears when actual invoices arrive for materials
Frequently asked questions
How do I know if a fixed-price quote is profitable?
Subtract all job costs — materials, labour, fuel, equipment, overhead allocation, and an overrun buffer — from the client price. If the remainder is positive and covers your minimum day rate for the days the job takes, the quote is profitable.
What is the difference between revenue and profit on a job?
Revenue is what the client pays. Profit is what remains after every cost associated with the job is deducted — including materials, subcontractors, fuel, and a share of your fixed overhead. Many contractors confuse the two, especially when materials make up a large portion of the job value.
Should I include VAT in a quote profitability calculation?
No. Use figures excluding VAT throughout. VAT collected from clients is not your income — it belongs to HMRC. Similarly, VAT you pay on materials is recoverable. Work with net figures to get an accurate profitability picture.
Why do quotes that look profitable turn out not to be?
The most common reasons are: materials costs are underestimated, overhead is not allocated per job, time overruns are not budgeted for, and tax is not considered before assessing profit. RateCheck builds overrun allowances and overhead allocation into every assessment.
How much buffer should I add to a quote for overruns?
A minimum of 5% of the total job time is a reasonable starting point. For complex or first-time jobs, 10–15% is more appropriate. Track your actual versus estimated hours across several jobs and adjust your buffer based on your real overrun history.
Check your next quote before you send it
Enter the job details and RateCheck shows whether the price will be profitable.
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