Most contractors underprice. They cover costs but don't build real profit. Here's how to fix that.
Know Your True Costs
Materials, labor (including your time), truck costs, insurance, tools, marketing, office expenses. Most people forget half these costs.
Your Time Has Value
What do you want to make per hour? $50? $100? $150? Whatever it is, multiply by hours for the job. That's your labor cost, not profit.
The Markup Formula
Add up all costs. Add profit margin (15-30% minimum). That's your price. If the market won't bear it, you need to cut costs or find better customers.
Stop Competing on Price
If you're the cheapest, you attract price shoppers who will leave for someone cheaper. Compete on value - speed, quality, reliability, professionalism.
Raise Your Prices
If you're busy all the time, you're priced too low. Raise prices 10-20%. You might lose some customers but make more money working less.
Value-Based Pricing
What's it worth to the customer? A burst pipe at 2am is worth more to fix than a dripping faucet. Price accordingly.