Closeup of repairman in uniform, professional builder working using construction equipment. Process of building, apartment renovation, repairing, building. Coloring, measuring, preparing the base.

Plumbing Pricing Guide: How To Set Profitable Service Prices

Understanding how to strategically price plumbing services is essential for the success of any plumbing business. Meticulous planning goes into developing pricing models that strike the correct balance between profit and staying competitive. These models take into consideration factors like labor, materials, overhead expenses, and your long-term business goals.
We’ll look at two pricing strategies, how to calculate key expenses, and how to position your plumbing business competitively from a pricing and service perspective.

Seamlessly Implement a Custom Plumbing Flat Rate Price Book For Your Business Today

Time and Materials vs. Flat Rate Pricing

There are two primary pricing models utilized across the industry; time & materials and flat rate pricing.

Plumbing Time & Materials Pricing Model

Time and materials pricing promotes flexibility. An hourly rate, the total amount of time spent executing the job, total cost of materials and markups determine how much each job will cost the homeowner. This pricing model varies depending on how much time it takes to complete each job

Time and Materials Equation

((Total Job Hours x Hourly Rate) + Materials) x Markup = Time & Materials Price

Example: ((5 hours x $75) + $400) x 1.2 = $930



Plumbing Flat Rate Pricing Model

The flat rate model promotes transparency. These prices include the average time for job completion, total cost of materials, and markups. Plumbing prices per fixture or standard operations are predefined—regardless of the actual time it takes to complete the work.

Time and Materials Equation

((Total Job Hours x Hourly Rate) + Materials) x Markup = Time & Materials Price
Example: ((5 hours x $75) + $400) x 1.2 = $930



These four strategies can help structure flat rate pricing to cover unexpected costs:

1. Include a buffer for unforeseen issues

2. Conduct a thorough assessment before providing a quote

3. Create a clear pricing structure for additional work

4. Keep a reserve fund for unexpected expenses

When deciding on a pricing model, it’s important to decide what you value most. If you value transparent pricing and customer retention, then flat rate pricing may be right for you. If you value a highly adaptive model, then time & materials pricing would be the best option. Selecting the ideal pricing model for your business involves careful reflection on your market position, customer base, and efficiency. To support this decision-making, utilize the following calculations to gain detailed insights.

Comprehensive Cost Calculations for Plumbing Jobs

When it comes to growing a successful plumbing business, it’s crucial to have a comprehensive understanding of the costs involved in your projects. Labor, materials, profit margins, and overhead all create a profitable pricing structure.

How To Calculate Plumbing Labor Costs

Before quoting a job, you must assess the complexity of the job. This assessment dictates the number of technicians needed and the estimated time to completion. Once you’ve determined the appropriate number of technicians, you will need to calculate your labor cost.
Labor costs should include the plumber’s hourly rate, federal and state taxes, social security, health insurance, and worker’s compensation insurance. Each of these costs will vary based on your market. Depending on factors like local and national average pay, demand for services, and cost of living, plumber costs can differ significantly between regions. For a fair wage and competitive hiring, this is an important factor to consider when setting prices.
Average plumber cost per hour based on skill level.
To maintain profitability, it’s standard in the industry to mark up labor costs. A 20-30% markup accounts for the unseen costs of running a business, such as recruitment, training, and human resources management.

Plumbing Labor Cost Equation

(Number of Technicians x Total Job Hours) x (Hourly Rate x Labor Markup) = Total Labor Costs
Example: (1 x 5) x ($75 x 1.2) = $450

How To Calculate Plumbing Overhead Costs

Overhead encompasses all the indirect costs of running your business, from office rent and utilities to vehicle maintenance, insurance, and marketing. It’s essential to determine these costs with precision to accurately spread them across projects.

Hourly Overhead Cost Equation

Total Monthly Overhead Costs / Number of Billable Hours Per Month = Hourly Overhead Cost
Example: $10,000 / 700 = $14.29

Overhead Cost Per Job Equation

Hourly Overhead Cost × Total Job Hours = Total Overhead Cost Per Job
Example: $14.29 x 5 = $71.45
Common plumbing business overhead costs

Total Job Price Equation

Labor + Materials + Overhead = Total Job Price
Example: $450 + $420 + $71.45 = $941.45

How To Price Your Plumbing Services Competitively

Now that you’ve identified the costs associated with running your business, it’s important to conduct a competitive analysis to further inform your pricing strategy. To conduct a competitive analysis start with a report that identifies other plumbing service providers in your area. These providers should offer similar services and operate in the same locations as your business.
Once you’ve identified who your competitors are, utilize their websites, reviews, or word of mouth to outline the pricing for their services and compare them to your own. If you find that the price you’re charging for a service is substantially higher or lower than the average amongst your competitors you can evaluate decreasing or increasing your markup accordingly.
Additionally, consider the average income and home size of your clients. This information can help you determine which of the 4 pricing strategies will attract your customers the most.
Keep in mind that you do not have to offer the average service price. If you offer higher quality service, equipment, or premium services, you may be able to justify setting above-average rates.
Sample plumbing competitor pricing analysis.

Premium Services for Setting Above-Average Prices

A premium service strategy will add additional value to your customers, enable you to charge higher prices and generate more profit. Customers are looking for plumbing companies that will be responsive in an emergency and provide affordable services. These 3 premium service examples are popular ways to provide convenience and value to your customers.

Examples of Premium Plumbing Services

Emergency Response Services

One of the most lucrative aspects of plumbing is the ability to respond promptly to emergencies. Implementing an on-call schedule with your technicians and providing an emergency phone number will demonstrate the readiness of your team to handle crises at any given moment and provide convenience to your customers. For 24/7 emergency service calls like sump pumps or clogged drains, you can charge a higher flat rate or create a premium service markup.

Membership Programs

Membership programs offer exclusive benefits like priority scheduling, reduced costs for routine maintenance, and service savings. This is a premium service that provides both convenience and value, which is important for driving customer retention. Membership programs provide an additional income source and predictable revenue for your business.

Customer Financing

Larger plumbing projects can be too expensive for customers to pay out of pocket and can prevent them from fixing serious plumbing issues. By offering financing options, you create a stress-free experience and remove another barrier to closing the sale. Financing prevents you from chasing down invoices and helps you get paid on every job.

When Is It Time To Update Your Service Pricing?

Achieving a balance between predictable pricing for your customers and profitable pricing for your business is essential. Your customers appreciate consistency, but your business must also remain agile in adapting to market changes. Striking this balance is key to customer retention and long-term profitability. Frequently changing prices can shake customer confidence, while stagnant pricing could leave your business vulnerable to rising costs.
One of the primary signals that should prompt a price review is a change in costs associated with running your plumbing business. You may need to change labor or material costs as the market shifts. Review your prices annually to accommodate for inflation and market changes.

How to Measure an Effective Plumbing Pricing Strategy

If you’ve developed your plumbing pricing strategy correctly, your business should be able to obtain an average gross profit margin between 40% to 60%. To calculate your plumbing business profit margin, you must first calculate your net income. Then, you will divide your net income by your total revenue to determine your profit margin.

Net Income Equation

Total Revenue – Material Costs – Labor Costs – Overhead Costs = Net Income
Example: $500,000 – $105,000 – $150,000 – $20,000 = $225,000

Profit Margin Equation

(Net Income / Total Revenue) x 100 = Profit Margin
Example: ($225,000 / $500,000) x 100 = 45%
Additionally, you can calculate the profitability of each job utilizing the same equations. On average, if you are obtaining your target profit margin on each job, then you know that the pricing model you’ve implemented is working for your business. Lastly, customer lifetime value (LTV) is another key performance indicator (KPI) of effective pricing. LTV is the total revenue gained from each customer throughout your partnership. The average plumbing LTV is $8,023. A below-average LTV indicates an above-average turn rate or below-average revenue per job. LTV can be increased through an improved customer experience, higher pricing or job upsells.

How To Automate Plumbing Profitability

Plumbing management software can help automate profitability in several ways.

When evaluating which plumbing software to work with these questions will help you find software that simplifies operations, improves your collections, and helps you sell more.

Payzerware is a single solution that fulfills all of your back office, field operations, client experience, and insight management needs. Payzerware offers automatic reporting, QuickBooks integration, flat rate price books, maintenance agreements, 24/7 support, comprehensive onboarding, in-platform financing, an easy-to-use app, and much more! Schedule a demo to see why Payzerware is trusted by over 15,000 contractors as their go-to software partner.

Establishing and maintaining a profitable plumbing pricing strategy balances the cost of service delivery with market demands and customer expectations. Embracing regular price evaluation practices is key to keeping your business competitive and profitable. You are ready to create long-term growth for your company by using these pricing strategies and plumbing software.

See How Payzerware Can Help You Increase Your Revenue an Average of 26% in Year One

Share this article

Related Articles