It is the last week of the month. You pay the bills, you draw the line, and you look at what's left. You worked two hundred and fifty hours. Your own figures said this month should land somewhere around thirty per cent. It came in under ten. And you have no idea which job did it to you.
I have had that week more times than I want to admit, in industries that had nothing to do with each other.
Construction. Facility management. Pest control. Logistics. Food. Automotive. Shipyards as well as buildings. Different trades, different customers, different rules, different words for absolutely everything.
And one thing in common, in every single one of them.
Every business I ever ran was spending more on labour than it knew it was spending.
Not a bit more. Not a rounding error. Enough to be the whole difference between the profit on the quote and the profit in the bank.
Here is how it happens, and it happens the same way everywhere.
You price a job. You put in the materials, because you can see the invoice. You put in the hours, because you know what you pay per hour. You add a margin that feels right. Then you check what the market charges, and if you're much above it you come back down, because you'd rather have the work than the argument.
So you end up pricing at roughly the average. Everybody does. Which is exactly why two firms doing identical work, in the same city, with the same skill and the same quality, can end the year in completely different places — one comfortable, one wondering where it all went. They're charging the same. They're just not costing the same, and only one of them knows it.
Because the quote contains the man's hourly rate. It does not contain the company he works inside.
Nobody sits down and thinks that the price they hand the client has to carry everything the business pays for simply to exist:
- The accountant, and the payroll software, and the bank charges
- The insurance, the licences, the certifications, the annual renewals
- The office. The rent, the heating, the internet, the phones
- The person who answers those phones, who has never once been on a job you invoiced
- The van. Fuel, servicing, tyres, the week it sat broken
- Tools that wear out, get lost, get replaced
- The training, the medicals, the safety gear
- Holiday, sick days, the statutory contributions on top of the wage
- The estimating itself — the hours you spend pricing five jobs to win one
- And yes, the toilet paper in the office toilet, which somebody buys, out of the same money
Every one of those is real money going out. None of them appears on the quote. And most of them don't announce themselves — they arrive quietly, monthly, by direct debit, from an account you only really look at when the month ends.
That's the trap. The costs are monthly. The pricing is per job. So the job always looks profitable, and the month never quite is, and there's no obvious line connecting the two.
When you finally do the arithmetic properly — take everything the business pays out, divide it across the hours you can actually invoice, and get a real cost per productive hour — the number is never the one people expect. In my experience it has never once come out lower. It comes out higher, and often by a margin that would have changed the price of every job you quoted last year.
And there's a second half to it that hurts more. Not every hour you pay for is an hour you can sell. Travel. Waiting for materials. The re-do. The half day lost because the site wasn't ready. You pay for all of them. You invoice none of them. So the real cost per billable hour is higher again — and that is the only number that should ever go into a price.
I knew all of this the hard way, in six industries, one bad month at a time. And for years I did what everyone does with hard-won knowledge — I carried it around in my head and gave it away over the phone.
Then I tried to have it built. I went to programmers, explained what I wanted, and got back things that were technically fine and practically useless, because they were building a spreadsheet for a problem they had never had. You cannot brief somebody on a mistake you can only recognise by having made it.
So, later than most people start anything, I learned to write code myself. Not to become a developer. To get one specific thing out of my head and into a form that works without me in the room.
Everything I had ever seen about what employees actually cost went into it. Not the payroll number. The whole number — the one that includes the accountant and the van and the toilet paper, divided across the hours you can genuinely put on an invoice.
The price you quote is the only decision in your business you make before you know the answer.
Everything else you can correct. You can chase a late payment, renegotiate a supplier, replace a bad hire. But once you've signed at a price built on the wrong cost, the loss is already in the contract. You just don't see it until the end of the month, when you draw the line and wonder how two hundred and fifty hours turned into eight per cent.
The owners who make money aren't working harder than you. They just know a number you don't.