Introduction
Pricing work as a subcontractor is a fundamentally different challenge to pricing as a main contractor. You are not managing the entire project; you are pricing a defined package of work within a larger scheme, often against tight deadlines and stiff competition from other specialist firms. Getting your pricing right is the difference between building a profitable, growing business and constantly chasing work at margins that barely cover your costs.
Whether you are a mechanical and electrical installer pricing a services package, a drylining contractor tendering for a fit-out or a groundworks specialist quoting for a housing development, the principles of effective subcontractor pricing remain the same. You need to understand the tender documents, measure accurately, apply realistic rates, account for risk and present a return that gives the main contractor confidence in your ability to deliver.
In this guide, we walk through the key steps that subcontractors and specialist trades should follow when pricing work. These tips are drawn from years of experience supporting subcontractors with professional estimating, and they apply whether you are pricing a small domestic package or a multi-million-pound commercial installation.
Why Pricing Is Different for Subcontractors
Main contractors price entire projects. They coordinate multiple trades, manage preliminaries across the full build programme and carry the overall risk of delivering the scheme on time and on budget. Subcontractors, by contrast, price a specific scope of work and must fit within the main contractor’s programme, site rules and commercial framework.
This distinction has several practical implications for how you approach pricing. First, you are almost always working from documents prepared by someone else. The drawings, specifications and bills of quantities are produced by the design team and issued by the main contractor. Your job is to interpret these documents accurately and price your element of the work, no more and no less.
Second, subcontractor tenders are typically compared on a like-for-like basis. The main contractor will line up three, four or sometimes six returns for the same package and compare them side by side. If your price is significantly higher than the rest, you will be eliminated. If it is significantly lower, the main contractor may question whether you have understood the scope. The goal is to be competitive, credible and clear.
Key Point: Subcontractor pricing is about precision and clarity. Main contractors want to see that you have understood the scope, measured the quantities, allowed for the specification and presented a price that can be relied upon. A vague or incomplete return will be set aside in favour of a competitor who has done the work properly.
Third, subcontractors carry specific risks that main contractors do not. You may be reliant on others for access, power, storage and welfare facilities. Programme delays by preceding trades can push your works into less productive periods. Material price fluctuations can erode your margins if your tender is held open for several months before a contract is awarded. Understanding and pricing for these risks is a critical part of preparing a competitive return.
Understanding the Tender Package
Before you put pen to paper or open a spreadsheet, the single most important step is to read and understand the full tender package. This sounds obvious, but it is remarkable how many subcontractors lose money because they failed to read the specification properly, missed a drawing revision or overlooked a key requirement buried in the preliminaries.
A typical tender package will include architectural and engineering drawings, a specification (often referencing NBS clauses), a bill of quantities or schedule of works, preliminary requirements, the form of subcontract, and any employer’s requirements or site-specific constraints. You should read every document, not just the ones that relate directly to your trade.
Pay particular attention to the specification. It defines the quality of materials and workmanship required, and it often contains requirements that are not immediately apparent from the drawings alone. For example, a drylining specification might require a specific fire rating, acoustic performance or moisture resistance that significantly affects your material costs. Missing these details can turn a profitable job into a loss-making one.
Tip: Create a tender checklist for your trade that lists every item you need to verify before pricing. Include drawing revisions, specification clauses, prelim requirements, programme dates and any qualifications or exclusions from the main contractor. This disciplined approach ensures nothing falls through the cracks.
If anything in the tender package is unclear or contradictory, raise it with the main contractor before you submit your return. Pricing on assumptions is risky. A quick email clarifying the scope, specification or programme can save you thousands of pounds and demonstrate to the main contractor that you are thorough and professional.
Pricing Labour Accurately
Labour is typically the largest single cost element in a subcontractor’s price. Getting it wrong, even by a small percentage, can have a dramatic effect on your profitability across a package. Accurate labour pricing requires a clear understanding of the quantities involved, the productivity rates your operatives can achieve and the all-in cost of employing or engaging your workforce.
Start with the quantities. If the tender package includes a bill of quantities, check the measurements against the drawings. Bills are not always accurate, and pricing errors in the bill become your problem once you have signed the subcontract. If no bill is provided, you will need to carry out your own take-off from the drawings. This is where a professional estimating service can add real value, particularly on larger or more complex packages where the measurement exercise alone can take days.
Next, apply realistic productivity rates. These should reflect the actual output your teams achieve on site, not theoretical textbook rates. Consider the complexity of the work, the height and access conditions, the level of coordination with other trades and any restrictions imposed by the site programme. A bricklayer laying facing brickwork at ground level in good weather will achieve a very different output to one working at height on a scaffold in winter.
Your all-in labour rate must account for the full cost of your workforce. This includes basic wages, holiday pay, pension contributions, employers’ National Insurance, CITB levy, travel time, training costs and any overtime or weekend working that the programme demands. Many subcontractors underestimate these on-costs and end up with labour rates that do not reflect the true cost of putting an operative on site.
Key Point: Review your labour rates at least every six months. Wage agreements, National Insurance thresholds and pension auto-enrolment contributions all change, and your rates need to keep pace. A rate that was accurate twelve months ago may now be costing you money on every hour worked.
Material Pricing and Waste Allowances
Materials are the second major cost element for most subcontractors, and accuracy here is just as important as it is with labour. Your material prices should be based on current supplier quotations, not historic rates from your last project. Construction material prices have been volatile in recent years, and a price that was competitive six months ago may now be significantly out of date.
For any package of meaningful value, obtain written quotations from at least two suppliers before you finalise your tender. Make sure the quotations are based on the specification in the tender documents, not a generic product that may not meet the required standard. Check lead times as well as prices. If a specified product has a long delivery period, it could affect your programme and create additional costs.
Waste allowances are an area where many subcontractors either overprice or underprice their work. The correct waste factor depends on the material, the complexity of the work and the site conditions. As a general guide, standard building materials such as bricks, blocks and plasterboard typically carry a waste allowance of 5 to 10 per cent. More expensive or bespoke items may warrant a lower allowance, while materials that are cut to fit on site, such as floor coverings or cladding panels, may require 10 to 15 per cent.
Do not forget to include the cost of delivery, unloading, storage and any double handling that may be required on site. If the main contractor does not provide adequate storage or requires materials to be delivered in specific sequences, these logistics costs can add up quickly.
Preliminaries, Overheads and Profit
Many subcontractors focus almost exclusively on labour and materials and give insufficient attention to preliminaries, overheads and profit. These are the elements that determine whether your business makes money or simply turns over revenue.
Preliminaries are the site-related costs that are not directly attributable to a specific measured item but are essential to carrying out the work. For subcontractors, these typically include site supervision, welfare facilities (if not provided by the main contractor), temporary works such as scaffolding or edge protection, plant and equipment, site transport, rubbish removal and any testing or commissioning required by the specification.
Overheads are the costs of running your business that are not directly charged to any single project. These include office rent, administrative staff, accountancy fees, vehicle running costs, insurance premiums, IT systems, tool and equipment replacement, marketing and the cost of estimating work that you do not win. Every tender you submit must carry a contribution towards these overheads, otherwise your business is being subsidised by your personal time and capital.
Tip: Calculate your annual overhead costs and divide them by your expected turnover to arrive at an overhead recovery percentage. For most subcontractors, this figure falls between 8 and 15 per cent of turnover. Apply this percentage consistently to every tender to ensure your overheads are fully recovered.
Profit is what remains after all costs have been covered, and it is the reward for the risk you are taking. Do not be tempted to reduce your profit margin to win work. A subcontractor who consistently works on margins below 5 per cent has very little buffer against unexpected costs, variations or payment delays. Aim for a net profit margin that reflects the risk and complexity of the work, typically between 5 and 10 per cent for most specialist trades.
Presenting Professional Returns
The way you present your tender return matters more than many subcontractors realise. Main contractors receive multiple returns for every package, and the ones that are clear, well-structured and easy to compare are the ones that get serious attention. A price scribbled on a single sheet of paper, with no breakdown and no qualifications, does not inspire confidence.
Your tender return should include a clear summary of the works you are pricing, an itemised breakdown that aligns with the bill of quantities or schedule of works, a list of inclusions and exclusions, your programme requirements, details of your insurance and any relevant accreditations, and a covering letter that confirms your understanding of the scope.
Align your pricing breakdown with the format requested by the main contractor. If they have issued a bill of quantities, price it line by line. If they have provided a pricing schedule, complete it in full. Do not submit your own format if a specific return format has been provided. Making it easy for the main contractor to compare your price against competitors increases your chances of being selected.
Tip: Always state your qualifications and exclusions clearly. If you have excluded scaffolding, temporary power, skip hire or any other item, say so explicitly. Ambiguity in your return creates risk for the main contractor and often leads to your price being loaded or rejected. A professionally prepared tender leaves no room for misunderstanding.
Include a validity period for your price. Material costs and labour availability can change quickly, and you should not be held to a price indefinitely. A validity period of 60 to 90 days is standard for most subcontract tenders. If the main contractor needs a longer commitment, consider whether you need to include a price fluctuation clause to protect your margins.
How Estimating Services Help Subcontractors
For many subcontractors, the biggest constraint on growth is not a lack of available work but a lack of capacity to price it. Tender deadlines are often tight, and the time spent measuring quantities, obtaining supplier quotations and preparing detailed breakdowns is time that could be spent managing work on site or developing client relationships.
This is where professional estimating services can make a significant difference. A qualified Quantity Surveyor can take the tender documents, carry out a full measurement of your package, apply current labour and material rates and produce a detailed, itemised estimate that you can review, adjust and submit as your own. The result is a more accurate, more professional return prepared in a fraction of the time it would take to do in-house.
The commercial case for outsourcing estimating is straightforward. If you are spending two or three evenings a week pricing tenders, that time has a value. If professional estimating support helps you submit more tenders at a higher standard, and even one additional win per year covers the cost many times over, the investment pays for itself. Many of our subcontractor clients find that their win rate improves noticeably once they start submitting professionally prepared returns.
For subcontractors who tender regularly, a subscription service offers an efficient way to access ongoing estimating support at a predictable monthly cost. This is particularly valuable for growing businesses that need to maintain a consistent flow of tender submissions without the overhead of employing a full-time estimator.
Whether you are a specialist trade looking to improve your pricing accuracy, a growing subcontractor who needs to free up time for site management, or a firm that wants to tender for larger and more complex packages, professional estimating support can help you compete at a higher level. Get in touch to discuss how we can support your business, or explore our full range of estimating services to find the right solution for your needs.