📨 Contractor’s Digest – Daily Rundown
📅 Wednesday, March 26, 2025
🛠 Helping Contractors Win More Jobs, Increase Profits & Avoid Costly Mistakes
🚧 Today’s Rundown
🔹 3 Pricing Mistakes That Crush Contractor Profits
🔹 Business Tip: How to Raise Your Prices Without Losing the Job
🔹 Tool Spotlight: Budget Laser Measure That Actually Works
🏗️ Feature Story: 3 Pricing Mistakes That Crush Contractor Profits
💸 Why It Matters:
You didn’t get into construction to break even. But too many contractors are stuck in a cycle: booked solid, working hard—and still wondering where the money went.
It’s not because they’re bad at work. It’s because the pricing system is broken before the job even starts.
Here’s the truth:
Profit isn’t what magically appears at the end. Profit is what you build in from the beginning.
If your bid only covers labor and materials, you’re not running a business—an expensive hobby.
Let’s examine the 3 biggest pricing mistakes that quietly kill contractor profits and how to stop them cold.
📉 1. Bidding to Win (Instead of Bidding to Profit)
Too many contractors fall into the trap of pricing to “win the job.”
They look at what the competition charges—or what the client says they can afford—and race to the bottom.
Here’s the problem with that approach:
• Your time isn’t free
• Your crew isn’t free
• Your tools, gas, admin, and insurance aren’t free
👉 If you’re not pricing in profit, you’re losing money on every job—even when you think you’re busy.
And here’s the kicker:
You've already lost if a client chooses you solely because you’re the cheapest.
Cheap clients are the hardest to please and the quickest to complain.
✅ Instead, compete on professionalism, reliability, and clarity.
Your process should scream, “We do it right, and here’s why we’re worth it.”
If someone wants the lowest bid? Let ‘em go.
📉 2. Forgetting Overhead and Hidden Costs
Let’s say you price a job:
• $12,000 in labor
• $8,000 in materials
Done, right?
Wrong.
Where’s the line item for:
• Gas for the truck?
• Dumpster rental and dump runs?
• Time spent prepping quotes and scheduling?
• Office supplies, bookkeeping, cell phone, and general liability insurance?
If you don’t account for overhead, you’ll pay those costs out of pocket—and you'll be bleeding slowly.
✅ Add a flat overhead percentage to every job—typically 10–15%.
This ensures your business expenses are covered every time. Don’t hope there’s enough left over—price like a company that intends to stay in business.
🧠 Pro mindset: You’re not just doing the work—you’re running the operation. Price accordingly.
📉 3. Skipping Markup on Materials and Subcontractors
You’ve priced labor and materials… but here’s what most contractors skip:
• Buying all the lumber, paint, fasteners, fixtures—with zero markup
• Coordinating and managing subcontractors—without charging a dime for your time or risk
🚫 Big mistake.
Why? Because you’re taking on the liability and management load. You’re making phone calls, checking deliveries, chasing receipts, and fixing mistakes if they go wrong. That deserves compensation.
✅ Industry-standard markup ranges:
• 10–30% on materials
• 15–50% on subcontractors
And no—it’s not “price gouging.”
It’s how professional businesses stay profitable and protected.
If you don’t mark it up, you’re giving away your time, energy, and risk for free.
🔧 If you mark it up, you treat it like a business. If you don’t, you run a charity.
🚀 Pro Tip:
Every bid you send out should do two things:
Cover ALL your costs—including overhead and risk
Build in real, intentional profit—not just hope something’s left over
If it doesn’t do both, you’re not charging enough. Full stop.
🔐 Bottom Line:
Profit starts at the estimate.
Not in the last invoice. Not in the “maybe we’ll have a little leftover.”
If you want to build a lasting business, stop treating your pricing like a guessing game.
Price like a business owner—not a handyman.
📩 Want a “Healthy Pricing Formula” cheat sheet with markup examples, profit margins, and a plug-and-play estimator you can use on your next bid?
Reply to this email, and we’ll send it over—for free.
📌 Business Tip: How to Raise Your Prices Without Losing the Job
Most contractors worry that raising prices will scare clients away. But here’s the truth:
👉 You don’t lose work by charging more—
You lose work when you can’t prove the value behind your price.
And even worse? You lose your business when you undercharge and burn out.
The right clients don’t want the cheapest contractor—they want the one they can trust to get it done right, without drama, shortcuts, or callbacks.
Raising your prices is about positioning, communication, and confidence. Here’s how to do it like a pro:
✅ Lead with Your Process, Not Your Price
When you start conversations about cost, clients start evaluating you on price.
When you lead with your process, they see professionalism.
Here’s what clients are buying:
• A contractor who shows up when they say they will
• A written contract that prevents surprises
• Regular updates that keep them in the loop
• A clean job site, a respectful crew, and a project that finishes on time
🛑 Stop selling labor.
✅ Start selling clarity, communication, and confidence.
Once they understand the protection your process provides, your higher price feels like a value—not a risk.
✅ Use Anchoring to Shift Expectations
Most homeowners don’t know what a remodel should cost—they only know what they want to pay. That’s why anchoring is key.
Anchoring means setting a price reference point before giving your actual quote. It shifts their expectations up so your bid feels reasonable.
Example:
“We’ve done similar kitchen remodels in the $65–$85K range, depending on finishes and layout. Based on your scope, you’re coming in around $72K.”
Now your number feels like a solid middle—not a highball.
You can also anchor with quality:
“The last client went with high-end custom cabinets that added about $20K, but they said it was their best decision.”
That client will now see your price through the lens of value, not just dollars.
✅ Offer Options: Good / Better / Best
Give people a choice instead of a take-it-or-leave-it. It puts them in control and makes your premium option feel like a smart upgrade—not a requirement.
Example:
• Good: Basic fixtures, laminate counters, 2-week timeline – $45,000
• Better: Mid-grade upgrades, quartz counters, upgraded appliances – $58,000
• Best: Custom everything, 3D renderings, pro interior design support – $75,000
Now, even if they choose the middle option, you still make a healthy margin—and they feel like they got a deal.
This also gives you flexibility to upsell down the line.
✅ Stand Firm (Confidence Closes Deals)
If you hesitate, they hesitate. If you seem nervous about your price, they’ll wonder what you’re hiding—or where they can negotiate.
Say your number like it’s standard.
Because it is.
Try phrases like:
• “That’s our typical pricing for this scope and quality of work.”
• “We’ve found this is what it takes to do it right and stand behind it.”
• “We don’t cut corners, and our clients know it pays off.”
The more confident you are, the more trustworthy you appear. And people don’t mind paying more for someone they trust.
🚀 Pro Tip:
If you're booked out for 4+ weeks? Raise your prices.
If your jobs are all coming in at breakeven or less? Raise your prices.
If your team is overworked but you can't afford to hire help? Raise your prices.
You can’t grow by undercharging.
The right clients will still say yes—and you’ll finally have the margin to breathe, plan, and profit.
🔐 Bottom Line:
Pricing isn’t just about what the job is worth. It’s about what your business needs to thrive.
The best contractors don’t chase low bids—they build value in every process step. When you learn how to raise your prices confidently, you stop surviving—and start scaling.
📩 Want a plug-and-play “Pricing Confidence Script” to use during client estimates?
Reply to this email, and we’ll send you the exact lines to say when presenting your price—so you sound like a pro every time.
⚡ Tool Spotlight: Budget Laser Measure That Works
🔹 Bosch GLM 20 Compact Laser Measure
• One-button simplicity
• Accurate to 1/8 inch
• Under $50
It's perfect for quick estimates, layout checks, and tight-space measuring without tape flapping everywhere. It's pocket-sized and dead simple.
😂 Contractor Humor:
What’s a contractor’s favorite pickup line?
"Wanna come see my deck?"
📣 Call to Action
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Do you have a pricing question you want answered in a future issue? Hit reply and let me know.
👷♂️ Stay sharp, price smart, and build better,
— Benjamin Patton