Contractor’s Digest – Sunday Marketing & Sales Guide (March 30, 2025)

🧠 Contractor’s Digest – Sunday Marketing & Sales Guide
📅 March 30, 2025
Newsletter #5: Value-Based Pricing Strategies That Increase Profit Margins by 50–100%
🛠 Helping Contractors Win Better Jobs, Close Bigger Deals & Avoid Competing on Price

From the desk of Benjamin Patton

Over the last few weeks, we’ve covered how to:
✅ Build referral systems that work like clockwork
✅ Stand out with a unique market position
✅ Implement lead follow-up systems that close
✅ Turn your website into a 24/7 lead machine

Today, we’re going after the single most powerful move you can make to boost profit and attract better clients:
👉 Value-Based Pricing.

Ask any contractor what frustrates them most, and you’ll hear:

But here’s the truth:
It’s not that the customer is too cheap. It’s that the contractor didn’t clearly communicate the value.

Most contractors use one of three flawed pricing strategies:
❌ Guessing what the market will bear
❌ Applying a standard markup
❌ Doing what they’ve always done

None of those are based on your actual costs—or the value you deliver.

In a survey, we ran of 157 contractors making under $1M/year:
🔸 76% hadn’t calculated their actual overhead correctly
🔸 82% couldn’t explain their value proposition to justify premium pricing

That’s not a pricing problem. That’s a positioning problem.

Let’s break it down:

Contractor A (Standard Pricing)
• Project Price: $10,000
• Costs: $7,000
• Overhead: $2,000
• Profit: $1,000 (10%)

Contractor B (Value-Based Pricing)
• Project Price: $13,000
• Costs: $7,000
• Overhead: $2,000
• Profit: $4,000 (31%)

That’s a 400% profit increase—with the same cost structure.

Contractor B isn’t lucky. He’s just pricing right.

David ran a successful deck-building company but was stuck at 8–10% margins, working 65+ hours a week. After switching to value-based pricing:

✔️ He recalculated actual overhead (from 22% to 42%)
✔️ Built good/better/best package pricing
✔️ Used visual tools to show value differences
✔️ Trained his team to sell based on outcomes, not hours

6 Months Later:
• Avg. project price: $16.4K → $23.8K
• Net profit margin: 8% → 27%
• Revenue: $850K → $1.3M
• Hours worked: 65/week → 45/week

He didn’t just raise prices—he raised perceived value. And the market responded.

List every business expense:
• Overhead, tools, insurance, downtime, admin, your salary

Then:
• Calculate your overhead recovery rate
• Add your target net profit margin (20%+ minimum)
• Include contingencies for project risk

💡 Create a simple “floor pricing” calculator. Anything below that number is a no-go.

Clients don’t just buy work—they buy outcomes.
Document your Value Drivers:
• Time savings
• Risk reduction
• Warranty guarantees
• Long-term cost savings
• Boosted property value
• Peace of mind

💡 Build a “Value Inventory” document to train your team and upgrade your proposals.

Create good/better/best options for your primary services:

💡 Clients often pick the middle when given choices—but they feel in control, not sold.

When a client asks: “Why is your price higher?”—don’t apologize. Don’t defend.

Say this instead:

Tools to support this:
✅ “Why Us” one-pager
✅ Side-by-side project comparisons
✅ Common objection rebuttals
✅ Visual walkthroughs of your process

💡 Confidence closes. Price is just a number—value makes it feel worth it.

Roll it out with these simple steps:
• Start with one service line
• Test with new leads
• Document results
• Refine based on buyer behavior
• Gradually increase prices over time

💡 Track your close rates, margin per job, and package selection. Let the numbers guide your strategy.

Objection 1: “You’re more expensive than others.”
🎯 Response: “That’s common. Can I show you what’s likely causing the price difference—and why it matters in the long run?”

Objection 2: “It’s not in the budget.”
🎯 Response: “Totally understand. We have options—including basic packages and flexible timelines. Which direction feels best to you?”

Objection 3: “I need to think about it.”
🎯 Response: “Absolutely—this is a big investment. Can I answer any questions to help you feel more confident about the decision?”

🔹 Project Minimums: Focus only on jobs that hit your revenue/margin threshold
🔹 Rush Pricing: Charge premiums for expedited timelines
🔹 Recurring Revenue: Offer maintenance packages post-project
🔹 Value-Added Discounts: Add perks—not price cuts—to close competitive bids
🔹 Seasonal Pricing: Charge more in peak season, incentivize off-season work

1. Calculate Your True Costs
• List every expense
• Determine your overhead rate
• Set your minimum viable price

2. Build Your Value Comparison Tool
• Good/Better/Best options
• Visual, simple, and client-friendly

3. Train on Value Communication
• Role-play objections
• Refine your sales language
• Build “Why Us” materials

4. Test With This Week’s Leads
• Introduce tiered pricing
• Document feedback
• Watch what packages they pick

5. Track and Adjust
• Log close rates
• Track net margins
• Refine as you grow

There are customers at every price point—but not every customer fits your business.
Stop racing to the bottom. Build a business where value drives pricing, not guesswork.
Your profit margin isn’t greedy—the fuel that grows your company, supports your team, and gives you back your time.

📣 Coming Next Sunday
We’ll show you how to build powerful social proof that closes jobs faster—including the system one contractor used to boost close rates from 31% to 52% by upgrading his testimonials and past project docs.

📩 Do you have questions or a pricing challenge? Hit reply—I read every message.

👷‍♂️ Stay sharp, price with purpose,
— Benjamin Patton

P.S. Do you Know a contractor struggling with pricing and profitability? Forward this email and tell them to grab our free eBook: "Top 10 Mistakes Contractors Make in Marketing" at [contractorsdigest.com ].