{"id":8473,"date":"2026-10-21T09:00:00","date_gmt":"2026-10-21T14:00:00","guid":{"rendered":"https:\/\/www.incsight.net\/blog\/?p=8473"},"modified":"2026-10-15T16:51:20","modified_gmt":"2026-10-15T21:51:20","slug":"how-to-raise-prices-as-a-contractor","status":"publish","type":"post","link":"https:\/\/www.incsight.net\/blog\/2026\/10\/21\/how-to-raise-prices-as-a-contractor\/","title":{"rendered":"How to Raise Your Prices as a Contractor Without Losing the Good Customers"},"content":{"rendered":"

He has quoted the same water heater swap at $1,850 for six years (example numbers).<\/p>\n

Customers know the price. Some of them tell their neighbors. It has become his price, the way some guys have a truck they’ll never sell.<\/p>\n

In those six years the unit cost went up. So did insurance, the van, and the hour spent driving between calls. The price stayed because it felt like his. Every year the same job paid him a little less, and nothing flagged it.<\/p>\n

No invoice was ever wrong. The number just stopped meaning what it used to.<\/p>\n

What Six Years at the Same Price Looks Like<\/h2>\n

Here is that same job, then and now (example numbers):<\/p>\n\n\n\n\n\n\n\n\n
<\/th>\nSix years ago<\/th>\nToday<\/th>\n<\/tr>\n<\/thead>\n
Price<\/td>\n$1,850<\/td>\n$1,850<\/td>\n<\/tr>\n
Unit and parts<\/td>\n$780<\/td>\n$990<\/td>\n<\/tr>\n
Labor and truck<\/td>\n$370<\/td>\n$490<\/td>\n<\/tr>\n
Left over for overhead and profit<\/td>\n$700<\/td>\n$370<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Same customer smile. Same five-star review. Almost half the money left over.<\/p>\n

Multiply that across every job type you haven’t repriced and you get the classic pattern: the schedule is full, revenue is up, and the bank account doesn’t agree. A full board of underpriced jobs is exactly how a contractor stays busy and stays broke<\/a>.<\/p>\n

Where Most Contractor Prices Actually Come From<\/h2>\n

Nobody in the trades was taught to build a price from the cost up. Most owners learned by watching someone else quote. So prices tend to come from three places.<\/p>\n

The shop across town.<\/strong> One plumber set his rate at $145 an hour because another shop charged $140. It felt fair. It felt competitive. It was never checked against anything. When he finally added up truck, insurance and drive time, his hour cost him $131 before a dollar of profit (example numbers). On a good hour he kept $14. On a callback, nothing. The rate came from across town. The cost came from his own shop.<\/p>\n

Gut feel.<\/strong> A remodeler bid bathroom remodels around $28,000 for three years because it felt like the right number (example numbers). Tile went up. His lead carpenter got a raise. Dump fees doubled. When someone finally added it up, the last nine bathrooms had made almost nothing.<\/p>\n

Habit.<\/strong> The $1,850 water heater. A number that was right once and never got looked at again.<\/p>\n

None of those are a pricing strategy. They are a starting point that drifted.<\/p>\n

Fast Yeses Are a Warning, Not Proof<\/h2>\n

The remodeler thought customers saying yes fast meant his price was right. It meant his price was low.<\/p>\n

If you are closing almost everything you quote, and nobody ever pushes back, that is information. A healthy close rate includes some people who say no because of price. If nobody does, you are probably leaving money on every job.<\/p>\n

Your 2027 Prices Get Set This Fall, or in a Hurry in February<\/h2>\n

Here is the timing problem most contractors don’t think about until it’s too late.<\/p>\n

Spring bids and maintenance agreement renewals go out early in the year, and they carry whatever prices exist when they go out. If you wait for a slow week in February to rethink pricing, the first bids of the year have already gone out at last year’s costs.<\/p>\n

Meanwhile most of next year’s increases are known by November: wage raises you plan to give, supplier price letters, your insurance renewal. That is enough to reprice now, with time to update your price book, your proposals and your maintenance agreements, and to train the team on what to say.<\/p>\n

Prices set in a hurry are prices set by last year.<\/p>\n

Step 1: Rebuild the Cost Before You Touch the Price<\/h2>\n

Don’t start with “how much can I raise it.” Start with what the work costs today.<\/p>\n

That begins with your real cost per billable hour, including payroll taxes, insurance, benefits and all the hours you pay for but can’t bill. We walked through the math in what one hour of your crew really costs<\/a>. For a lot of shops, that number alone explains why margins have thinned.<\/p>\n

Then add materials at today’s prices, with a waste factor, and a fair share of overhead. If you aren’t tracking cost per job yet, job costing for contractors<\/a> shows how to start with a single job.<\/p>\n

Step 2: Raise by Job Type, Not Across the Board<\/h2>\n

A flat 8% on everything is easy, and it is usually wrong. Some of your jobs are priced fine. Some are underwater. A flat increase overcharges the first group and still under-prices the second.<\/p>\n

Look at your most common job types one at a time. The ones you have quoted at the same number the longest are usually where the biggest gap is hiding. Those get the biggest correction.<\/p>\n

Step 3: Know How Many Customers You Can Afford to Lose<\/h2>\n

This is the math that takes the fear out of it.<\/p>\n

Go back to the water heater (example numbers). At $1,850 he keeps $370 per job. Say he does 100 a year: $37,000 left over.<\/p>\n

Raise the price to $2,150 and he keeps $670 per job. To clear the same $37,000, he needs 56 jobs, not 100. He could lose more than 40 of those customers and still be even. In practice, most shops lose far fewer than that, and the ones they lose tend to be the ones who were shopping on price alone.<\/p>\n

Run this for your own top job types. Once you see the number, the fear of losing a few price shoppers gets a lot smaller.<\/p>\n

Step 4: Protect the Customers Worth Keeping<\/h2>\n

Not every customer is the same. The good ones pay on time, don’t haggle, call you first and send their neighbors. You want to keep them. A few simple moves help:<\/p>\n