# How to build a unit-price analysis step by step

> A unit-price analysis breaks the price of a line item into materials, labour, equipment and overheads. How each component is built, with a full worked example.

- Author: Carlos Pérez (Comandos) — CEO of Paladio
- Published: 2026-08-10
- Original: https://usepaladio.com/en/blog/como-hacer-analisis-precios-unitarios/
- Costs

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A unit-price analysis is the breakdown of the cost of producing one unit of a line item. It splits the price into four blocks: materials, labour, equipment and tools, and overheads with profit. It is the basic unit of every construction budget and the document that holds the price up when somebody questions it.

A budget without this analysis is a price list with no argument behind it. With it, every figure has an explanation that can be reviewed, discussed and defended.

## The four components

### 1. Materials

The quantity of each input needed to produce one unit, times its price delivered to site.

Two things are frequently forgotten. The first is **waste**: the theoretical quantity is never the real one. Offcuts, breakage, material lost in handling. The percentages vary by material and by building system, and it is better to use those from your own history than the ones in the manual.

The second is that the price must be **delivered to site**, not at the shop. Freight, unloading and internal hauling are part of the cost of the material. When they are left out, the unit-price analysis comes out systematically low and nobody understands why the budget does not close.

### 2. Labour

This is where the quality of the analysis is decided, and it depends on two numbers.

**The real cost of the crew**, which is not the nominal wage. To the base wage you have to add social charges, benefits, employer contributions, holidays, the thirteenth salary or bonus, and whatever else applies in your country. The resulting multiplier — known as the real-wage factor, burden factor or similar depending on the market — is usually between 1.5 and 2.2. Using the nominal wage instead of the real cost is the most expensive and most common mistake in small companies' budgets.

**Productivity**, which is how much that crew produces in a day. Labour per unit is simply the daily cost of the crew divided by its daily output.

```
                     Daily cost of the crew
Labour per unit = ─────────────────────────────
                       Daily output
```

Productivity is the most sensitive variable in the analysis and the most arguable. A 20 % change in productivity moves the labour cost 20 % in the opposite direction.

### 3. Equipment and tools

Three different things that are better not stirred together.

1. **Small tools.** Estimated as a percentage of labour, typically between 2 and 5 %. It covers wear on trowels, plumb bobs, wheelbarrows and the like.
2. **Major equipment.** Calculated from the hourly operating cost — depreciation, maintenance, fuel, operator — divided by the equipment's hourly output. It is a separate and considerably more elaborate calculation.
3. **Scaffolding and safety equipment.** Prorated over the quantity of work it will serve.

### 4. Overheads, financing and profit

The three direct costs above add up to the **direct cost**. On top go, as percentages:

- **Site overheads:** site management, field office, store, security, utilities, PPE. Typically 8 to 15 %.
- **Head-office overheads:** administration, accounting, management. Typically 3 to 8 %.
- **Financing:** the cost of money during the gap between spending and being paid. Frequently forgotten and frequently significant.
- **Profit:** typically 5 to 15 %.
- **Additional charges:** depending on the country, contributions to industry bodies, compulsory insurance, bonds.

## A full worked example

Line item: concrete block wall 15×20×40 cm, laid with mortar, scaffolding included. Unit: m².

*(Illustrative figures in dollars. Substitute your own prices and wages.)*

**Materials**

| Input | Quantity | Waste | Total | Unit price | Amount |
|---|---|---|---|---|---|
| Block 15×20×40 | 12.50 pc | 3 % | 12.88 pc | 1.10 | 14.17 |
| Cement-sand mortar | 0.015 m³ | 5 % | 0.0158 m³ | 110.00 | 1.74 |
| Water and sundries | — | — | 1.00 lot | 0.10 | 0.10 |
| | | | | **Subtotal** | **16.01** |

**Labour**

| Category | Quantity | Real daily cost | Daily amount |
|---|---|---|---|
| Mason | 1.00 | 28.00 | 28.00 |
| Helper | 1.00 | 18.00 | 18.00 |
| | | **Crew cost/day** | **46.00** |

Assumed output: 10.00 m² per crew-day.

```
46.00 ÷ 10.00 = 4.60 per m²
```

**Equipment and tools**

| Item | Basis | Amount |
|---|---|---|
| Small tools | 3 % of labour | 0.14 |
| Scaffolding, prorated | — | 0.25 |
| | **Subtotal** | **0.39** |

**Build-up**

| Item | Amount |
|---|---|
| Materials | 16.01 |
| Labour | 4.60 |
| Equipment and tools | 0.39 |
| **Direct cost** | **21.00** |
| Site overheads, 12 % | 2.52 |
| Head-office overheads, 5 % | 1.05 |
| Financing, 1.5 % | 0.32 |
| Profit, 10 % | 2.49 |
| **Unit price** | **27.38** |

One figure worth noting: labour is barely 17 % of the unit price in this item, yet it is the component that varies most on site. Materials are 58 % and are reasonably predictable. That is why a 20 % deviation in productivity moves the total cost only 3.4 % — and why, in labour-intensive items such as finishes, services or structural steel, productivity matters far more.

## Common mistakes

1. **Using the nominal wage instead of the real cost.** It underestimates labour by 50 to 120 %.
2. **Leaving out waste.** It looks minor, and with expensive materials it is not.
3. **List prices instead of delivered-to-site prices.** Freight and handling pile up quietly.
4. **Copying manual productivity figures without adjusting.** Manuals assume standard conditions. Your project has its own height, access and crew.
5. **Forgetting financing.** If you are paid at 60 or 90 days, the cost of money is real and it comes out of your profit.
6. **Not versioning the analyses.** Input prices move. A catalogue with no date and no version is a source of arguments that cannot be settled.

## Frequently asked questions

**How often should I update my unit-price analyses?**

Input prices, every time you price a job. Productivity figures, with the real data from the projects you close. A catalogue that is not fed by actual history repeats the same mistakes project after project.

**Does the unit price include VAT?**

Normally not. The unit price is handled without taxes, which are applied to the total amount. Check the convention in your country and in the specific contract.

**How do I calculate the hourly cost of major equipment?**

By adding fixed charges — depreciation, capital, insurance, maintenance — plus consumption charges — fuel, lubricants, tyres or wear parts — plus the operator, all divided by the effective operating hours. It is a calculation of its own and deserves a separate article.

**What is the difference between a unit-price analysis and a price matrix?**

In most markets they are synonyms with different names. Some contracts use "matrix" for the specific tabular format the client requires, but the content is the same analysis.

**Can I use the same unit price for every floor of a building?**

You can, but you will lose precision. Above a certain height, vertical hauling degrades productivity measurably. The most careful catalogues separate prices by height range.