Most owners do not set out to underprice. They guess a number, win the job, and move on. Over time the guesses add up to a business that works hard and keeps little.
Each sign below has a How to check it line. You only need your invoices, your timesheets and your bank statements.
Eight signs you are underpricing
1. Almost everyone says yes right away
A fair price gets some questions. If nearly every customer accepts on the spot, you may be well below what they expected to pay.
How to check it: Look at your last 30 quotes. Count how many were accepted with no question or comment. If it is almost all of them, raise the next 10 quotes a little and see what happens.
2. You are busy but there is no cash
A full schedule and an empty bank account is the classic sign. You are selling plenty of work at a price that does not cover it.
How to check it: Add up three months of sales. Subtract every cost, including a wage for yourself. Compare the result with the change in your bank balance. If the profit is near zero, the prices are the first suspect.
3. You do not know what a job earns
If all you can say is that you did $1,200 of work, you do not know your profit. Without that, you cannot know if the price was right.
How to check it: Pick five recent jobs. For each, write down the price, the labor (labor) hours, the pay rate, materials, fuel and equipment. If you cannot fill in all of them, you are pricing blind. Job costing fixes this.
4. You price from what competitors charge
You do not know their costs, their wages, their overhead or whether they are making money. Copying a number you cannot explain is a guess.
How to check it: Write down how you set your last five prices. If what the others charge appears more than once, replace it with a price built from your own cost. How to price a job shows the steps.
5. Jobs running over is normal
If a job that was quoted at four hours often takes six, your quote is not a price. It is a hope.
How to check it: Compare quoted hours with actual hours on your last 10 jobs. If more than half ran over, your estimates or your prices are too low. Update your time per job from the real numbers.
6. You never lose a bid
Some lost quotes are healthy. They show you are not the cheapest option, and that is fine.
How to check it: Count the quotes you lost last quarter. If the answer is zero or close to it, your price is probably the lowest in the room.
7. Your prices have not moved while costs have
Wages, fuel, insurance, supplies and rent all change. If your price list is the same as it was, your margin has been shrinking.
How to check it: Write down the date of your last price change. Then list what has gone up since. Recalculate your hourly cost with the hourly rate calculator and compare it with what you charge.
8. You do not pay yourself a fair wage
If the business only works when you take little or nothing for your own hours, the price is subsidised by you.
How to check it: Log the hours you work on jobs, quotes and admin. Price those hours at what you would pay someone else to do them. If the business cannot cover that, it is underpriced.
What to do first
- Find your true cost per hour. Include wages, payroll costs, vehicles, tools and overhead. The labor burden calculator helps with the payroll part.
- Review your last 10 jobs. Work out the profit on each. Find the ones that lost money or barely earned anything.
- Fix new quotes first. Price every new job from its real cost plus the margin you need. Use the job price calculator.
- Then handle existing customers. Raise prices with early notice and a clear reason. Use the price increase calculator for the steps.
- Check again in 60 to 90 days. Compare profit per job, not only total sales.
You do not need all eight signs to have a problem. Two or three are enough to look closer. The records will give you a straight answer.
CrewBrain tracks the real cost and profit of each job, so you can see which prices are too low and fix them with facts instead of guesses.
Keep reading
- How to Raise Prices Without Losing Customers
- Job price calculator
- Job costing: find the jobs that quietly lose you money
- All guides and free calculators
Questions owners ask
How do I know if I am underpricing my services?
Check your last 10 to 30 jobs. Warning signs are quick yes answers, no cash despite full schedules, jobs that run over, and not knowing the profit on each job.
Is it bad if customers never push back on my price?
It can be. A fair price usually draws a few questions or lost quotes. If almost every customer accepts at once, test a small rise on your next 10 quotes.
Can I find my real profit per job from my records?
Yes. Take the price and subtract labor hours at your true pay cost, materials, fuel and equipment. Then compare that profit with the margin you need.
What should I fix first if I am underpricing?
Work out your true cost per hour, review your last 10 jobs, and price all new quotes from real cost. Raise prices for existing customers after that.