Pricing a Service Job So It Stays Profitable
A quote that only covers labor and materials looks profitable until overhead catches up. Here is the OMR math for pricing a job that actually holds its margin.
A workshop supervisor in Salalah quotes OMR 25 for an air-conditioner service call. The gas, the technician's time and the fuel to get there add up to about OMR 10, so the job looks like a tidy profit. It isn't, once you remember that the same job also has to help pay the rent, the receptionist's salary and the van insurance, month after month, whether that customer calls or not.
The cost you can see, and the cost you can't
Every quote you write has two layers of cost sitting inside it, whether you notice them or not. The first is direct cost: the labor, materials and fuel that this one job needs and nothing else. The second is overhead: the steady costs of keeping the business open at all, whether this particular job happens or not.
Rent, an admin or reception salary, business insurance, van running costs, software subscriptions and loan repayments all live in that second bucket. Most small business owners price confidently for the first layer. They know a technician costs a certain amount per hour and a spare part costs a fixed price. They rarely stop to ask how many riyals of rent and admin salary that same hour of work needs to cover before the job is actually making money.
- Shop, workshop or office rent
- Admin, reception or accounts salary (non-billable staff)
- Business insurance and vehicle running costs
- Software subscriptions: accounting, invoicing, scheduling
- Loan or equipment lease repayments
The worked quote: one AC job, start to finish
Take Salim, who runs a small maintenance company in Ruwi with two technicians, as an example. A customer in Al Khuwair asks for an air-conditioner deep clean and gas top-up, a two-hour job. Here is how Salim should build the price, one line at a time, using his own real numbers rather than a guess.
| Line item | Amount (OMR) | How it's worked out |
|---|---|---|
| Technician labor (2 hrs at OMR 1.70/hr) | 3.40 | OMR 350 monthly salary divided by 208 working hours |
| Gas and cleaning materials | 4.50 | Actual receipts for this job |
| Fuel and transport | 2.00 | Estimated km cost for the round trip |
| Direct cost subtotal | 9.90 | Labor plus materials plus fuel |
| Overhead recovery (2 hrs at OMR 3.00/hr) | 6.00 | OMR 900 monthly overhead divided by 300 billable hours across both technicians |
| Full cost to break even | 15.90 | Direct cost plus overhead recovery |
| Price at a 25% target margin | 21.20 | Full cost divided by (1 minus 0.25) |
| Price Salim actually quoted | 25.00 | Rounded up for a clean number |
| Real margin at the quoted price | 36.4% | (Price minus full cost) divided by price |
The discount floor you never cross
Customers negotiate, and that is normal. Before Salim agrees to knock anything off, he needs one number fixed in his head that he will not go below, no matter how politely the customer asks. That number is his discount floor: the lowest price that still covers direct cost and overhead recovery, plus a thin safety margin, usually around ten percent.
For this job, the floor sits close to OMR 17.70, which is the OMR 15.90 full cost divided by 0.9. Quote anything below that and Salim is effectively paying the customer to send a technician and a van across town. A friendly ten percent discount, from OMR 25 down to OMR 22.50, still sits safely above the floor. A forty percent discount down to OMR 15 does not, even though it can feel like ordinary generosity in the moment rather than a real loss.
What this means for you
Work out your own overhead recovery rate once, then reuse it for every quote you write this quarter. Add up one month of rent, admin salaries, insurance, software and loan repayments. Divide that total by the billable hours your team can realistically deliver in the same month, counting only the people who do paid, chargeable work.
Once you have that hourly rate, add it to every job's direct cost before you even start thinking about margin. Set your discount floor at that combined number plus a small buffer, write it down somewhere you will actually see it again, and treat it as a rule rather than a suggestion the next time a customer pushes back on price.
If your monthly numbers already sit in one place, pulling last month's overhead total is a two-minute job, not an afternoon one; see The One-Page Monthly Report a Founder Actually Reads for a simple way to keep that figure handy.
The bottom line
A price that only covers labor and materials is not a profitable price, at best it is a break-even one. Add your real overhead recovery rate to every quote, hold a firm discount floor, and the jobs you already have will keep the business standing, not just keep it busy.
