Your materials cost more than they did last year. So does fuel, insurance, and everything else that keeps the truck on the road. Your rates haven't moved because you're afraid the phone will stop ringing. That fear is understandable, but it only counts one side of the ledger. The customers you might lose are visible in your head. The extra profit on every customer you keep is invisible until you work it out.
Why waiting quietly costs you
If your costs go up and your prices stay flat, your margin shrinks even when you're just as busy. Nothing dramatic happens. You work the same hours and the money left over is a little smaller every month. That's the trap of standing still: it never feels like a decision, and it compounds.
A regular price review is the answer. It turns "should I dare to raise prices?" into a routine check: have my costs moved, and does my price still leave the margin I'm aiming for?
The math: a raise is bigger than it looks
Take a job that's ten hours of labor and $400 of materials. At a $70 rate, with a 20% materials markup, 15% overhead, and a 20% target margin, the price is $1,696.25 and the profit is $339.25. Here's what happens as the labor rate rises.
| Labor rate | Rate change | Job price | Price change | Profit | Jobs you can lose and break even on profit |
|---|---|---|---|---|---|
| $70 | - | $1,696.25 | - | $339.25 | - |
| $75 | +7.1% | $1,768.13 | +4.2% | $353.63 | about 4.1% |
| $80 | +14.3% | $1,840.00 | +8.5% | $368.00 | about 7.8% |
| $85 | +21.4% | $1,911.88 | +12.7% | $382.38 | about 11.3% |
Illustrative example — figures chosen to show the method, not a quote. How we source figures.
Two things stand out. First, the customer sees a smaller change than you feel. Moving your rate from $70 to $80 is a 14% jump, but the job price rises only about 8.5% because materials don't change. Second, the last column shows the safety margin. At $80 you could lose roughly one job in thirteen and still make the same total profit, because each remaining job pays you more.
It divides today's profit per job by the new profit per job. At $80, $339.25 ÷ $368.00 = 0.92, so about 92% of your current jobs would earn the same total profit. That assumes the work you lose isn't replaced and your costs per job don't change. It's a way to size the risk, not a forecast.
How much to raise
There's no universal percentage, and we won't invent one. Anchor the number to your own costs:
- Start from what you've actually paid. Compare this year's materials, insurance, fuel, and tool costs with last year's. That's your minimum justification.
- Check your margin on recent jobs. If jobs are landing below the margin you're aiming for, the size of that gap is your starting point. The profit margin guide shows how to set that target.
- Glance at your market. Look at what comparable local businesses quote. You don't have to match them, but it tells you how much room you have.
- Watch your close rate. If nearly every quote turns into a job, that's a sign you may be underpriced. If almost none do, look at more than price before deciding.
Who to raise prices on first
You don't have to change everything at once. Many tradespeople stage it:
- New customers first. They have nothing to compare against, so a new quote at the new rate is just the price.
- Then new quotes for existing customers. Give the new rate on the next job rather than reopening jobs already agreed.
- Handle long-running arrangements deliberately. For recurring or contracted work, check the terms you agreed. Some agreements need notice before a change, so read yours and give that notice.
- Don't change a price mid-job. An agreed estimate is agreed. If the scope changes, that's a change order.
How to tell customers
Keep it short, calm, and early. People tolerate price changes far better when they hear about them with notice, a plain reason, and no apology.
- Give notice. Tell regular customers before the new rate applies, so it never lands as a surprise on an invoice.
- Give one honest reason. "Materials and insurance have gone up, so my rates are going up on the first of next month." No essay.
- Don't over-apologize. An apology signals that the price is unfair. Say it like any other fact about your business.
- Be ready for one push-back. A friendly, firm "I understand, and this is what it costs me to do the job properly" is usually enough. Offering discounts to anyone who asks teaches everyone to ask.
They might. The math above is why that's survivable: you can lose some work and still come out even, and the time it frees up can go to customers who are happy to pay for the job done properly. Just don't count on that, and don't raise prices by so much that the safety margin disappears.
See the new number before you commit to it
Change your labor rate, overhead, or target margin in TradeReady's pricing calculator and watch the price, cost basis, and profit update on a real job. The calculator also shows a low, recommended, and high price range, plus your break-even price, so you can check a new rate against the work you actually quote before you say it out loud.
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The bottom line
A price increase is smaller to your customers than it feels to you, and it pays on every job you keep. Work out what your costs and target margin call for, stage the change, give notice, and say it plainly. Check your prices on a schedule, so it never has to be a big scary decision again.
Common questions
How often should I raise my prices?
There's no fixed schedule, but reviewing them at least once a year is a sensible habit, and sooner if your costs jump. The point is to check whether your price still leaves the margin you're aiming for, then adjust by a small amount, rather than waiting years and needing one large increase.
How much should I raise my prices?
It depends on your costs, your current margin, and your local market, so there's no standard percentage. Compare this year's costs with last year's, check the margin on your recent jobs, and raise the price enough to restore the margin you're aiming for. Then sanity-check the result against what local competitors quote.
Will I lose customers if I raise my prices?
You might lose some, especially those who chose you mainly on price. But because each remaining job pays more, you can lose a fair number and still earn the same total profit. In the example above, a rate rise from $70 to $80 means losing about one job in thirteen would leave profit unchanged, though your own numbers will differ.
Should I raise prices for existing customers?
Usually yes, but with notice and a plain explanation. Apply the new rate to new quotes rather than jobs already agreed, and check any contract or recurring arrangement for notice terms before changing it. Existing customers generally take a clearly explained increase better than a surprise on an invoice.
How do I tell customers my prices are going up?
Give advance notice, one honest reason, and a specific date, without over-apologizing. For example: materials and insurance have gone up, so rates change on the first of next month. Keep it short and friendly, and be prepared to hold the price if someone pushes back.
Is it better to raise my hourly rate or my materials markup?
Either can work, and it's fine to adjust both. Your labor rate reflects what your time is worth, and your materials markup covers handling, sourcing, and the risk of the parts. Look at which part of your pricing has fallen furthest behind your real costs and start there.
- All figures above are arithmetic on one sample job, calculated with the same true-margin method used in the app; they show how a price change flows through to profit. They are not survey data, and no standard or "average" increase is offered as fact. See how we research these guides.
- The "jobs you can lose" column divides current profit per job by new profit per job. It assumes lost work isn't replaced and per-job costs stay the same, so treat it as a way to size a risk, not a forecast.
- Notice requirements for changing prices on contracts or recurring work depend on your agreements and local rules. Confirm what applies in your jurisdiction.