How to Price a Commercial Construction Job, Step by Step
The short answer
Price a commercial job from the tender documents, package by package, with full prelims for the programme, your risk items and clear qualifications. Then check the payment terms, retention and cash you'll need, because a commercial job can win on price and still sink you on cash.
- Read the whole tender pack first: drawings, spec, contract, programme, site rules. The price hides in the small print.
- Price by package from measured quantities, with 2–3 subcontractor prices per package on the same scope.
- Prelims are bigger on commercial work: site manager, welfare, logistics, out-of-hours working, building rules.
- Model the cash: monthly valuations, payment periods, 3–5% retention, CIS and reverse charge VAT.
Your first commercial tender lands: a 120-page spec, a stack of drawings, a contract you've never seen and a return date in ten days. Price it like a kitchen extension and you'll either lose it by a mile or, worse, win it at a price that hurts.
Commercial pricing isn't harder maths. It's more documents, more prelims, different payment terms and a client with a QS who reads every line. Here's how to price a commercial construction job, step by step. Pricing your first one now? Book a free strategy call and we'll go through the tender with you.
When I switched Craftex to the general-contractor model, we went from smaller jobs to a £1.3M office fit-out within two months. Same contacts, ten more packages to sell.
How commercial pricing differs from domestic
| Domestic job | Commercial job | |
|---|---|---|
| Documents | A chat, sketches, maybe drawings | Tender pack: drawings, spec, contract, programme, site rules |
| Who checks your price | The homeowner | A QS, project manager or client's commercial team |
| Prelims | Skips, protection, parking | Site manager, welfare, logistics, out-of-hours, building rules |
| Payment | Deposit and stage payments | Monthly valuations, payment periods, retention |
| Tax | VAT charged to the homeowner | CIS deductions and reverse charge VAT between businesses |
| Risk | Mostly hidden conditions | Programme, delay damages, design gaps, contract terms |
None of this means you can't do it. It means the price has to cover more, and the paperwork has to protect it.
Step 1: read the whole tender pack before you price anything
Most pricing mistakes on commercial jobs are reading mistakes. Before any numbers, go through everything and list what affects cost:
- Contract: which form, payment terms, retention, delay damages, insurance levels required.
- Programme: start date, duration, phased handovers, fixed completion.
- Site rules: working hours, noisy work restrictions, deliveries, lifts, loading bay, security.
- Spec and drawings: what's specified by name, what's "or equal", what's missing or contradicts.
- Your questions: anything unclear goes back as a tender query, in writing, before the deadline.
Still not sure your commercial price covers everything?
Book a free call with our team. We'll check your packages, prelims, margin and cash flow before you submit.
Step 2: measure and split the job into packages
Measure quantities from the drawings, or check the bill of quantities if there is one. Then split the job into packages: strip-out, partitions and ceilings, M&E, joinery, flooring, decoration, specialist items.
Price your own trades from your rates library. For the rest, send each package to two or three subcontractors with the same scope and the same documents. An unusually cheap sub price usually means something is missing; check it line by line before you use it.
Put your management margin on every package. You're carrying the risk and guaranteeing the work.
Step 3: price the prelims properly
On domestic work, prelims are a few lines. On commercial work, they're often the line that decides whether the job makes money. Price them for the whole programme, week by week:
- Site management: a site manager or supervisor for every week on site.
- Welfare and temporary services: toilets, drying room, power, water, lighting.
- Logistics: deliveries, loading bay slots, lifts, storage, waste removal.
- Protection and hoarding: for the building, other tenants and the public.
- Access: towers, scaffold, MEWPs.
- Out-of-hours working: if the building only allows noisy work at night or weekends.
- Paperwork: RAMS, inductions, O&M manuals, test certificates, as-built drawings.
- Insurances and fees at the levels the contract asks for.
Pricing prelims as a percentage "because that's what others do". Build them from the programme. If the job runs 12 weeks, you pay for 12 weeks of site management, whatever percentage you guessed.
Step 4: add risk, overheads and margin
Look at the risks in the documents: a tight programme with delay damages, design that isn't finished, unknown conditions behind walls and ceilings. Price the real ones as risk items or cover them with qualifications. Don't just hope.
Then add overheads and margin: price = cost ÷ (1 − margin). On main-contractor work we aim for 25–35% gross margin, depending on the job and the competition.
On competitive tenders, show a lean base price and offer upgrades as options. If you need to come down, cut scope, not margin. Our guide to construction profit margins shows how to set your floor.
Pricing your first big commercial tender?
Book a free strategy call and we'll go through it with you.
Step 5: write qualifications and exclusions
Your price is only as good as what it says it includes. With the tender return, send a short list of:
- Qualifications: "Price based on drawings rev C and spec dated [date]", "Normal working hours 8am–6pm assumed", "Programme 12 weeks from access".
- Exclusions: items not in the documents, out-of-hours work not specified, statutory fees, furniture, client IT.
- Provisional sums: for work nobody can price yet, clearly marked.
- Tender queries and answers: what you asked and what you were told.
A clear tender looks more professional, not less. It's also what protects you when the scope changes and you need to price a variation.
Step 6: check the cash before you submit
A commercial job can make money on paper and still empty your bank account. Before you submit, model when money goes out and when it comes in.
| Month | Example: £240,000 fit-out, 12 weeks |
|---|---|
| Month 1 | You spend about £70,000: labour, subs, materials, prelims |
| End of month 1 | Valuation submitted for work done |
| Month 2 | Paid about 30 days later, less 5% retention and any CIS |
| Retention held at completion | £12,000 (5% of £240,000) |
| Released at practical completion | about £6,000 |
| Released after the defects period | about £6,000, often 12 months later |
The example is illustrative; read the payment terms in your contract. Ask yourself: can the business carry a month or two of costs before the first payment? If not, negotiate the terms, arrange finance, or don't take the job yet.
Also remember the tax side. On CIS work your client may deduct 20% from each payment unless you have gross payment status. Between VAT-registered businesses on CIS work, the domestic reverse charge usually applies, so you won't receive the VAT. Speak to your accountant before your first commercial invoice.
Moving up from domestic to commercial
Most builders don't jump straight to a £1M tender. Pricing a job three times your usual size first? See how to price your first big job. Start with smaller commercial jobs, get the systems in place, build a portfolio. Dmitriy, a plumber we mentor, landed his first £50K commercial project.
His first £50K commercial project
Dmitriy, plumber: from domestic work into commercial. Individual results, not typical or guaranteed.
Sviat Jay runs Craftex, a working construction company that delivers commercial fit-outs in London, including a warehouse fit-out for the fashion brand Drakes. He mentors owners one-to-one on pricing and winning this kind of work, aiming for results in about four months rather than a 1–3-year program. Want help moving into commercial work? Book a free strategy call.
If you'd rather have contractor-grade estimators price the tender for you, see our estimating and pre-construction service.
For the tendering side, read how to win construction tenders and, if you keep losing them, why tenders get lost. To check where your business stands in 4 minutes, take the free Construction Business Scorecard.
The Builder's Pricing Playbook
Package pricing, prelims, overheads and margin, with £ examples and the estimate summary sheet. 13 pages, free.
Get the free guideCommercial pricing checklist
This is general information from a contractor's experience, not legal, tax or financial advice. For your situation, speak to a solicitor or accountant. On the tools and under £500K a year? Watch our free training first.
Before you go
- The whole tender pack is read and every query is sent in writing
- Every package has 2–3 sub prices on the same scope
- Prelims are built from the programme, week by week
- Qualifications, exclusions and provisional sums go with the price
- You've modelled valuations, payment periods, retention and CIS
