How to Price a Service: A Simple Formula
Pricing a service means adding up five parts: your time, your direct costs, fees, margin and positioning. Leave one out and you lose money without noticing.
1. Your Hourly Rate
This is what each hour of your time needs to earn to cover your pay, your taxes and your monthly costs. If you don't know it yet, read How to Calculate Your Hourly Rate as a Freelancer.
2. The Real Time on the Job
Count everything the job takes: the first call and the quote, prep, driving, the work itself, cleanup and delivery. If you're not sure, time your next 3 jobs and use the average.
3. Direct Costs
Materials and supplies for that job, gas or mileage, parking, tolls and platform fees. These go into the price in full.
4. Fees
Card processors usually keep about 3% of each payment, and PayPal or online invoices a bit more. If you don't build the fee into the price, it comes out of your pocket. To build it in, divide the price by (1 − fee). With a 3% fee, a $200 job becomes 200 ÷ 0.97 = $206.19.
5. Margin and Positioning
With your costs covered, decide where you want to be: an entry price to win new clients, a fair price around the market average, or a premium price for standout service. Leave some room to negotiate without dropping below your cost.
Full Example
| Item | Amount |
|---|---|
| Hourly rate | $50.00 |
| Labor (3 h × $50) | $150.00 |
| Materials | $30.00 |
| Travel | $20.00 |
| Subtotal | $200.00 |
| Card fee (3%) | $6.19 |
| Final price | $206.19 |
| Rounded for the client | $210.00 |
If the client pays with cash, Zelle or Venmo, the price can be $200: with no fee, you take home the same amount.
Common Mistakes
- Copying a competitor's price without knowing if it covers your costs.
- Charging only for the hands-on time and forgetting quotes, driving and prep.
- Giving discounts out of your costs instead of your margin.
- Not raising prices when materials and gas get more expensive.
Do the Math Now
The price calculator does these five steps for you: pick your service, enter the time and your costs, and get a price, a range to negotiate and a quote ready to text or email.
Frequently Asked Questions
What is the formula to price a service?
Price = (hourly rate × hours on the job + direct costs) ÷ (1 − card fee). Then adjust for the margin and positioning you choose.
How do I work out the cost of a service?
Multiply the time it takes by your hourly rate and add materials, travel and fees for that job. That is your cost. Your price has to be above it.
Can I charge more than my competitors?
Yes, if you deliver more: showing up on time, a guarantee, better finish, better service. Just never charge below your cost.