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Pricing Mistake Business

Don’t Make This Mistake When Pricing Your Services

I was talking to my brother last week and he mentioned a business idea that he had. He was thinking of starting a lawn care business.

Naturally, just like anybody who’s never started a business, he has certain beliefs and ideas on how to get one going. Some of them really good, and some of them all too common mistakes.

One thing he said in particular that really popped out to me was that the way he figured it, he could charge just a little less than the other lawn care companies, and as a result, get a flood customers to jumpstart his business.

Basically, he was going to use low prices as his marketing strategy.

Now, I love my brother. He’s a great guy and he’s one of the smarter people I know. But dammit, this is one of the dumbest ways to approach business.

And I’m not writing this article to call out my brother. I’m writing it because I see this mistake made all the time, with almost every new handyman, consultant, freelancer, or anybody else offering a service as a business. (All of these businesses are surprisingly similar by the way.)

For some reason, everybody who wants to start a business thinks that pricing is the best marketing strategy. I don’t know where this comes from. Maybe from huge companies like Wal-Mart, Home Depot, or Costco – all companies that were built on low prices.

Or, maybe from the endless commercials advertising discounts or specials to bring people in – whether for tacos or t-shirt.

I don’t know what it is, but it’s convinced us as a society that pricing is the best marketing strategy. And, when you’re selling the same shit as everybody else, then low-prices can be a great strategy if you can make it work. But for 99% of businesses, it’s a terrible idea that will guarantee you make less money.

Here’s Why Underbidding Your Competitors Is Dumb

#1 – You probably aren’t more efficient

There’s only one way to make a solid profit and charge less than the competition and that’s to have a breakthrough in efficiency. Unless you’ve figured out a way to provide the same service with fewer resources (time, money, tools, materials, people), then charging less only means one thing – making less. And since you’re just getting started, you’re probably far less efficient than the competition is, which means even less money.

Amazon can offer 2-day free shipping because they’ve got a huge infrastructure and ship a ton of packages.

Wal-Mart can sell a gallon of Vinegar for a dollar because they move so much volume that they get special pricing from vendors and only need to make a few cents per product to generate billions in profits.

You and I? We’re just regular dudes with a garage full of tools and knack for fixing things.

#2 – Money isn’t the only factor customers consider

If every handyman offered the same exact service, showed up on time, was equally trustworthy, and did an impeccable work, then price would start to become more important. But you and I both know that’s not the case.

And, as a result, pricing isn’t even close to the only thing customers consider. It’s not even the main thing (at least not for the good customers). Sure, it will have an effect with certain customers, but that doesn’t matter. Don’t design your business around the low-ballers, design it around the people who are willing to pay for quality and convenience.

I can’t tell you how many times I get e-mails from my readers telling me that they raised their rates after reading my pricing guide and are busier than ever.

#3 – Math

If you take a second to do the math, you’ll be amazed at how even a small increase in your rates leads to a huge increase in profit.

For example, if you currently average about $50/hr for your services, then by raising your rates to $70/hr, you would DOUBLE your profit. $20/hr more, and your income doubles.

How would that impact your lifestyle?

Let’s say you are charging even less, for example $25/hr. You would only need to increase your rates by $15 to 40/hr to double your profit.

And the opposite is true as well. A small decrease in your rates has a huge negative impact on your profit. Why? Because no matter how much you charge, the cost of doing business remains about the same.

That means charging the customers just a little bit more makes you way more money. And when you do that, you can offer a better service, not work so damn much, and maybe even enjoy some life.

Stop Guessing and Start Profiting

Here’s the deal.

The handyman business, the lawn care business, the plumbing business, and just about every other home service business are all PROVEN business models. Thousands of others have already figured things out the hard way.

Are there still improvements to make? Yep, there always are. But do you really think that you are going to figure them out first try?

Probably not. So instead, save yourself some time and frustration. Follow a proven system that works, sidestep the common pitfalls, and get straight to making money.

Learn The Easiest Strategy For Instantly Boosting Your Bottom Line

Handyman Pricing Secrets

Get this FREE PDF guide that reveals a simple, proven strategy for boosting your profits (without working more hours).

  • Eric Gregg November 14, 2017

    Hi dan i love all the emails you send they have helped but. The resourses are out of my price range so it doesnt help at all. When your a new business and have no money how can someone afford to purchase a book that is so much? He cant thank you i would love to read those books and put them jnto play but im one of those guys who cant afford it. I dont mean this in a mean way if it sounded that way. Im just explaining myself. Thank you hope you have a blessed day

    • Dan Perry November 14, 2017

      Hi Eric,

      That’s ok, I totally understand. Have you read through this entire website yet? I have a LOT of free content that, if implemented, will get you to the point where you can easily afford my paid trainings. Hard work always pays off.

      -Dan

      • Matt Vorst November 14, 2017

        Dan –
        I’m three months into my business model and want to thank you for your expertise. A portion of my budgeted startup finances were for training – the money was well spent on your book! Thank you!

        • Dan Perry November 15, 2017

          Great to hear, Matt!

    • Wesley Stoodley November 16, 2017

      Hi Dan,

      Love the websight and the emails. I save them all and read them over and over to pick up new ideas. I aucally found you on itunes podcaset wich you should get back to doing! Hope to start my bussines here soon, here in Minnesota you need a builders license to do any kind of work. Any way keep the emails and blogs coming!

      • Dan Perry November 16, 2017

        Thanks Wesley! I’ve thought about doing more podcasts. I just need more time.

  • Dylan November 15, 2017

    Hey Dan, Dylan writing. Great post, I love the way you challenge some of the business intuitions we have like the idea that offering the lowest price is paramount. It must have something to do with being embedded in a consumer culture and the state of the advertising environment that pushes the fallacy of more for less on every TV, radio and YouTube ad we encounter. I love your genuine delivery of content, and I’m feeling really inspired to one day start my own taping business after discovering your podcast last night. Keep up the great work!

    Cheers.

    • Dan Perry November 15, 2017

      Thanks Dylan. Glad to hear I’ve giving you a little inspiration. I’m always thankful for the people who inspired me to just get started.

  • David November 20, 2017

    Hi Dan
    I’ve really gleaned a lot of information from your podcast. I’ve tried charging more in the $40-$50 range in my Handyman business in the north of New Orleans area. I seem to notice that customers start to back off unless I charge them around $35hr. I have explained that if google the average rate for Handyman it is closer to the $70hr range. It doesn’t seem to make a difference. I’m in an affluent cottage town but they don’t want to pay what everyone else seems to be paying. I’m afraid I will lose work if I start charging the fair rates. Any comments would be appreciated.

    • Dan Perry November 20, 2017

      I don’t know much about your business, but whenever I hear this it brings up two questions. Where are you getting your customers and how are you presenting yourself? If all of your leads are from craigslist or from word of mouth, then that is a big part of the problem. Word of mouth can be good, but not if people are recommending you because you’re cheap. And, as you’ve probably gotten from my podcast, looking professional and having confidence in your pricing goes a long, long way.

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