Pricing & Sales
7 min
By
Stuart Trier

SAMPLE - 5 Pricing Mistakes That Cap Your Margin

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The 5 at a glance

#MistakeWhat it costs
1Pricing off last year's costsSample: 3 margin points a year
2Discounting to win the jobSample: a quarter of every discount
3One markup for every job typeSample: thin jobs hide in the average
4Quoting without a break-even labor rateSample: every job runs at a loss
5Never raising prices on repeat customersSample: years of flat revenue per customer

Mistake 1 of 5

Pricing off last year's costs

What it costs: Sample: a 3-point margin slip on $4M of revenue is $120K a year.

How to spot it

Sample text. Your price sheet has not changed since before the last round of material and labor increases, and nobody can say when it was last checked against actual job costs.

What to do

  1. Pull the last 20 completed jobs and compare quoted margin to actual margin.
  2. Reset the price sheet from current material and labor costs, not from last year's sheet.
  3. Put a quarterly reminder on the calendar to repeat step one.
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Mistake 2 of 5

Discounting to win the job

What it costs: Sample: on a 30% margin job, a 10% discount removes a third of the profit.

How to spot it

Sample text. Discounts are approved on the spot by whoever is in the room, and nobody tracks how many jobs closed at a lower price.

What to do

  1. Set a discount ceiling by role and log every exception.
  2. Offer scope changes before price changes.
Sample quote from a real call, kept to two or three sentences, role only.

From a real call, role only.

Mistake 3 of 5

One markup for every job type

What it costs: Sample: the thin-margin jobs stay invisible inside the company average.

How to spot it

Sample text. Every quote uses the same markup, and gross margin is only reported for the whole company.

What to do

  1. Report margin by job type for the last quarter.
  2. Set a target markup for each type and re-quote the worst two.

Mistake 4 of 5

Quoting without a break-even labor rate

What it costs: Sample: every job carries labor priced below what the hour really costs.

How to spot it

Sample text. The hourly rate on the quote is the wage plus a guess, with no allowance for burden, vehicles, and overhead.

What to do

  1. Add wages, burden, vehicle, tools, and a share of overhead into one loaded hourly rate.
  2. Quote from that rate for the next 30 days.

Mistake 5 of 5

Never raising prices on repeat customers

What it costs: Sample: loyal customers pay last decade's price while costs keep rising.

How to spot it

Sample text. Your longest-standing customers pay the lowest rates on your books.

What to do

  1. List the ten oldest accounts and their current rates.
  2. Send a dated rate notice with a short reason.

Score yourself

Answer each question yes or no. Count your yes answers.

  1. Has your price sheet been rebuilt from current costs in the last 12 months?
  2. Do you know your margin on each job type?
  3. Can you state your loaded hourly labor rate?
  4. Do you log every discount and who approved it?
  5. Did your top ten accounts get a rate change in the last two years?

4 or 5 yes: Sample band text for a healthy result.

2 or 3 yes: Sample band text for a mixed result.

0 or 1 yes: Sample band text for a serious result. Take the free diagnostic.

Start here

Sample pick of which item to fix first, and why, in two sentences.

Frequently asked questions

1. How often should a home service company reprice?

Sample answer. Check quoted margin against actual margin every quarter, and rebuild the price sheet at least once a year.

2. What margin should a home service job carry?

Sample answer. It depends on the trade, so measure job-level margin first and set the target from your own numbers.

3. How do I raise prices without losing customers?

Sample answer. Give notice, give a short reason, and start with the accounts that pay the least.

Stuart Trier

Clear Results

Stuart Trier is the Founder and CEO of Clear Results. Over the past 20 years, Stuart has built, bought, and sold 11 companies across the home service, healthcare, and marketing industries. He built his first company from startup to $8M in revenue in 3 years before a successful exit, then built a chain of 28 healthcare clinics and sold the business to a publicly traded company. Following that acquisition, Stuart spent 3 years working alongside the CEO, helping lead the organization through a take-private transaction before participating in a nine-figure exit to a Fortune 10 company. Today, he's the lead investor behind an electrical services platform operating across 3 U.S. states, and has worked directly with owners through 1,800+ strategic advisory sessions.

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