Setting a price by adding a fixed profit margin on top of what the work costs you to deliver.
Cost-plus pricing sets your fee by adding up what a job costs you to deliver — your time, materials, subcontractors, overhead — then adding a profit margin on top. If a project costs you $2,000 to produce and you want a 40% margin, you charge roughly $2,800.
For sellers, cost-plus is straightforward and defensible: it guarantees you don’t lose money on a job, which makes it a sensible floor. Its weakness is that it ignores what the work is actually worth to the client, so it tends to leave money on the table for high-impact projects. For buyers, cost-plus pricing is transparent — you can roughly see what you’re paying for.
The smart move is using cost-plus as a minimum, not your only method. It tells you the price below which a job isn’t worth taking; value-based pricing tells you the ceiling. Knowing both, you can quote confidently. Just make sure your “cost” honestly includes overhead and your unpaid hours — our rate calculator helps you find that true number.