Most contractors don't go bankrupt from one catastrophic job. They bleed out from five small, systematic underpricing habits that compound over every ticket, every week, every season. Here's what they are, what they cost, and which free tool catches each one.
Discovery intents: contractor economics · waste removal contractor pricing · hvac trip charge · plumbing trip charge · electrical trip charge · contractor job pricing · service call minimum · rfp bid no bid · late invoice interest · claims vs evidence · change order pricing · scope creep
The single most common profit leak. Most contractors set hourly rates by checking competitors or picking a round number. The real rate must cover three layers: burdened wage (FICA, workers' comp, benefits — typically 25-40% above base wage), utilization (you pay for 8 hours but bill 5-6, so each billed hour carries the cost of non-billable time), and overhead (rent, trucks, insurance, admin spread across billable hours).
Example: a 3-person shop at $28/hr wage, 30% burden, 65% utilization, $120k/year overhead has a break-even rate of $86/hr. That's the floor — zero profit. Charge $75/hr and you lose $11 on every billed hour. For an 18% net margin, you need $104/hr.
Typical annual leak: $15,000-$60,000 for a 3-person crew pricing 25% below break-even.
Fix: Job Profitability & Break-Even Calculator · Full guide: How to Calculate Your True Break-Even Rate · FAQ
"Free estimates" are the most expensive thing a trades business gives away. A service call costs drive time (paid, unbillable), on-site diagnostic time, dispatch/admin, and vehicle cost. A typical HVAC or plumbing trip runs $150-220 in true cost before a single wrench turns. Waiving that fee on 6 declined calls per week means $46,000-68,000 per year in donated labor.
The fix isn't just "charge more" — it's knowing your floor. Your trip charge must recover all clock time the call consumes, plus truck and office cost, then leave a real margin. Market rates matter for positioning, but your cost math is your floor.
Typical annual leak: $25,000-$55,000 for a shop waiving 6 diagnostics/week at $80-175 true trip cost.
Fix: Service Call Minimum & Trip Charge Calculator · Full guide: How to Price a Service Call Without Losing Money · FAQ
"Just while you're here" is how profit walks off the job. Change orders get priced on materials and hours, but the invisible costs — admin time to quote and approve, schedule delay while crews wait, overhead not recovered on the change, and the higher risk of disruption — are never included. Industry estimates put scope-change cost at 10-15% of project value.
Example: a customer asks for 2 extra recessed lights. Most contractors charge $435 (materials + hours). The true cost including admin, delay, and overhead is $745. At a 30% margin (appropriate for change orders carrying more risk), the price should be $1,064. Underpricing by $629 per change order, once a week, is $32,708/year.
Typical annual leak: $15,000-$35,000 for a crew doing 1-2 underpriced change orders per week.
Fix: Scope-Creep & Change Order Cost Calculator · Full guide: The Hidden Cost of Scope Creep · FAQ
Every bid costs money to prepare — estimating hours, takeoffs, site visits. If your win rate is 15% and you're spending $3,000-5,000 per bid, you're burning $20,000-30,000/year on bids you were never going to win. Worse: winning a bad bid commits your crew to a job that loses money while blocking better work.
Expected value is the filter: P(win) × job profit − bid cost − opportunity cost. If that's negative, don't bid. A 25% win rate on $50k profit with $5k bid cost and $3k opportunity cost is marginal ($4,500 EV). At 15% win rate, it's negative (−$500). Know your numbers before you commit estimating hours.
Typical annual leak: $10,000-$30,000 in wasted bid prep on low-probability RFPs.
Fix: RFP Bid Go / No-Go Scorer · FAQ
A $15,000 invoice 60 days late at 18% APR accrues $444 in interest. But the real cost is the cash gap — if you're drawing on a line of credit to cover payroll while waiting, add your LOC rate on top. Many contractors don't charge late interest because their contract doesn't include a clause, making collection harder and signaling that late payment is free.
The fix starts with contract language: a late-payment clause (1.5%/month is common and enforceable in most states), a clear payment schedule, and a follow-up process that starts at day 30, not day 60. Track the daily carrying cost so you know exactly what each overdue invoice is costing you.
Typical annual leak: $5,000-$15,000 in uncollected interest and carrying costs on $100k+ in slow-paying receivables.
Contractor Job Pricing →
Break-even billable rates, quote margin vs markup, and change-order true cost.
Contractor Change-Order Leakage →
Checklist to stop unapproved work and underpriced change orders before cash walks off the job.
Contractor Service Call Pricing →
Trip charges, diagnostic floors, and field-service ticket minimums.
Contractor HVAC Pricing →
HVAC trip floors, diagnostic fees, truck-roll break-even, and add-on repair change orders.
Contractor Plumbing Pricing →
Plumbing trip floors, drain-clog fees, found-pipe change orders, and past-due carrying cost.
Contractor Electrical Pricing →
Electrical trip floors, diagnostic fees, panel/circuit change orders, and past-due carrying cost.
Contractor RFP Bid Decision →
Go/no-go scoring and expected value before estimating hours are burned.
Contractor Late Invoice Interest →
Past-due interest, daily carrying cost, and a total-to-request figure.
Contractor Claims vs Evidence →
Checklist to refuse fake-green delivery, liveness, credential, config, and external-receipt claims.
Contractor Waste Removal Pricing →
Hauler and roll-off shop math: break-even rates, trip floors, extra-pull change orders, and past-due carrying cost.
Job Profitability & Break-Even Calculator →
Burden labor, utilization, and overhead into a true break-even billable rate.
Scope-Creep & Change Order Cost Calculator →
Recover admin time, schedule delay, and overhead in scope-creep pricing.
Service Call Minimum & Trip Charge Calculator →
Set a trip/diagnostic floor that still leaves net margin.
RFP Bid Go / No-Go Scorer →
Check whether bidding has positive expected value before the chase.
Late Invoice Interest & Carrying Cost Calculator →
Turn unpaid principal and contract rate into a collection follow-up ask.
Claims vs Evidence Verifier →
Lint delivery, liveness, credential, config, and external-receipt claims against fresh evidence.
How to Calculate Your True Break-Even Billable Rate →
Detailed guide with real examples: burdened wage, utilization, overhead, and the markup-vs-margin trap.
How to Price a Service Call Without Losing Money →
Trip charge math, real market rates by trade, and the true cost of "free estimates."
The Hidden Cost of Scope Creep: How to Price Change Orders Right →
Real examples of underpriced change orders and the true cost stack you should be pricing.
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