642: How To Know If It's Time To Raise Your Rates Without Losing Clients

This Podcast Is Episode 642, And It's About How To Know If It's Time To Raise Your Rates Without Losing Clients

A Practical Guide for Contractors Who Want to Stay Profitable—Without Scaring Off Business

If you're like most small construction business owners, you've probably had this thought:

"I'm working non-stop, but I'm still barely keeping up—should I raise my prices?"

And then right after that, the fear kicks in:

"What if I lose clients? What if no one can afford me anymore?"

As construction bookkeeping specialists, we hear this frequently. Contractors are nervous to raise their rates because they worry it'll cost them jobs or damage their reputation. But here's the truth:

Raising your rates isn't about greed—it's about survival.

In this post, we'll guide you through understanding when it's time to increase your rates, how to do it without losing your best clients, and how your books can provide the data and confidence to price with clarity.

Why Contractors Hesitate to Raise Rates

Let's start with the everyday fears:

• "My clients won't pay more."
• "I'll lose out to cheaper competition."
• "What if I price myself out of the market?"

These fears are common, but often based on assumptions rather than data.

Low rates can hurt your business more than help it. They lead to:

• Burnout from overwork
• Poor-quality clients who expect a lot and pay late
• Inability to reinvest in tools, help, or marketing
• Projects that cost more than they bring in

So let's flip the script. Instead of fearing a rate increase, let's explore how to raise with purpose—and use facts, not fear, to guide your pricing.

1. Start with Job Costing

Before raising rates, you need to know one thing clearly:

Are you actually making money on your jobs?

Job costing is the process of tracking:

• Labor hours (including your own!)
• Material and supply costs
• Subcontractor fees
• Equipment and tool usage
• Permits, dump runs, gas, insurance
• A share of your overhead (office, truck, phone, software)

Once you tally this up, compare it to what you charged. If you're seeing slim margins—or worse, negative ones—you're undercharging.

Bookkeeper's Tip: Start by reviewing your last 5–10 jobs. Break them down into:

• Estimated vs. actual cost
• Hours quoted vs. hours worked
• Gross profit (before overhead)
• Net profit (after overhead)

Even a simple spreadsheet can help you see which jobs are winners—and which ones need a pricing tune-up.

2. Watch for These Signs - It's