22/02/2026
. The 4 Numbers Every Service Business Should Understand Before Giving a Price.
Most pricing problems in service businesses don’t come from lack of work — they come from building prices in the wrong order.
Over the years I’ve seen incredibly skilled tradespeople working flat out, yet still feeling pressure on cashflow, growth, and profit. The issue usually isn’t effort. It’s structure.
That’s why I teach the LOOP framework.
LOOP stands for:
Labour
Overhead
Outlay
Profit
And the sequence matters.
Labour should be calculated as the true cost of employing someone, not just a wage. That means rate of pay plus National Insurance, pension contributions, holidays, and all employment-related costs. When Labour is treated purely as cost — not charge-out price — it becomes a solid foundation instead of a guess.
Overhead is where many businesses underestimate reality. Vehicles, fuel, insurance, tools, software, admin time, training, rent — all the invisible expenses required for a business to exist. When you understand your overhead per productive hour, pricing stops being emotional and starts becoming predictable.
Outlay is the direct project cost: materials, plant hire, subcontractors, waste removal, deliveries. These are the obvious numbers people tend to focus on, but they only make sense once Labour and Overhead are already understood.
And finally, Profit — not whatever is left at the end, but a margin designed intentionally from the start. Profit isn’t a bonus for working hard; it’s what allows reinvestment, stability, and growth.
What LOOP really does is change the question.
Instead of asking:
“What should I charge per hour?”
You start asking:
“What does it actually cost my business to operate, and what profit do I want this project to deliver?”
When you price in this order:
– Estimates become consistent
– Growth decisions become clearer
– Pricing conversations feel less stressful
Your price stops being a reaction to competitors and becomes a reflection of how well you understand your own numbers.
Pricing isn’t just a figure on a quote — it’s a business model written in numbers.
