Learn how to start or grow a handyman business
Handyman Startup
How to stop underbidding jobs

How to stop underbidding jobs and start charging what you deserve

Underbidding jobs sucks. Not only does it cost you money, but it can also make you feel defeated and demotivated because you are essentially giving away your most precious resource (time) for free.

During the first couple years of running my handyman business, I lost a lot of money by underbidding jobs. The worst part is that I would often know I was underbidding a job in the moment, and still do it anyway.

It did this more times than I’d like to admit, but over time I learned a few strategies that helped me overcome my natural tendency to underbid, and I finally started charging what I was worth (and even a bit more at times).

This boosted my income, my confidence, and how much I enjoyed my business. Learning to quote with confidence is empowering.

Of course, there is more to mastering your pricing than I can share in one article, but here are seven tips you can start using right now to quote your next job with confidence.

#1 – Understand your numbers

The first, and most important tip, is to understand your business from a financial perspective. A good place to start is by answering the following questions:

  • How much do you need to make per hour to hit your income goals?
  • How many billable hours do you need to work each week on average to hit your income goals?
  • How much does it cost you to do a free quote?
  • What is the minimum amount you must charge to make money on small jobs?

Most new business owners can’t answer these questions despite the fact that they are fundamental to actually running a profitable business.

If you don’t know the answers yet, that’s OK. But your next step is to figure out the answers.

Once you understand how much money you need to make each hour, each day, and each week, you’ll have a fundamental shift in how you look at pricing. Instead of pricing jobs willy nilly or going off of what others charge, you’ll know exactly how much you must charge in order to run a sustainable business.

This is often enough to stop the underbidding by itself.

I have an in-depth pricing course that will guide you step by step to figure all of this out and more. If you don’t know your numbers, do yourself a favor and go here to and get that course right now.

#2 – Be prepared for tough questions

Many customers will put you on the spot with pricing. They’ll want you to give them an estimate over the phone or will rush you to give them a price while you are still looking over a job. They may even ask for a discount.

If you’re not prepared for these situations, you may give answers that you regret. I know I’ve done this many times myself.

Here are a few examples of questions you’ll want to be prepared for:

  • Can you give me a ball park estimate?
  • What is the best price you can give me?
  • Do you offer a cash discount?
  • Do you mark up materials?
  • What if I buy the materials?
  • Do you have a discount for veterans or the elderly?

Being prepared will not only help you avoid common pricing mistakes, but it will also give you more confidence when talking money with customers. Customers will respect and trust you more if you are confident, and will be more likely to hire you because of that.

#3 – Have a minimum service charge

As a handyman, you will come across a lot of very small jobs. Some jobs may only take fifteen minutes to complete.

You could charge your customers very little (or nothing at all) for these projects and then make the money back on large projects. This is a common strategy for contractors because it plays on people’s need to reciprocate. By giving customers a deal on small jobs, they are much more likely to hire you for their next big project because they have a need to pay you back.

However, there’s a major problem with this strategy – It only works if your bread and butter is large projects like kitchen and bath remodels.

If your business is anything like my handyman business, you make the vast majority of your money on those two to four-hour jobs. That means that you need to make a profit on small jobs and can’t afford to do them at a discount or for free.

That’s where a minimum service charge comes in. It guarantees that even the smallest jobs are worth your time.

#4 – Don’t give quotes on the spot

This goes along with tip #2 above, but it’s very important so I wanted to emphasize it.

Unless you are quoting a job you’ve done a thousand times and you know exactly how much to charge, never give a quote on the spot.

Instead, let your customer know that you will get back to them with a quote. At a minimum, go out to your vehicle and compose a quote without the customer hovering over you. This will allow you to collect your thoughts and formulate a quote that actually makes sense.

In fact, don’t even give a ballpark estimate because that will anchor the customer to that price. Once they hear a price, it’s difficult for their minds to accept significant changes to it.

Please note that this only applies to jobs that you are actually submitting a quote on. In many cases, especially for small jobs and jobs where you are charging hourly, it’s far less stressful to communicate price as soon as possible as described here.

#5 – Let some jobs go

The most profitable handymen and contractors know that if they are getting every job they quote, then it’s time to raise their prices.

Many go by the rule that you should only land one job for every three jobs you bid on, otherwise your prices are too low. I think this is a good rule of thumb for contractors doing large projects, but not for handyman services. As a handyman, you should expect a higher success rate because most homeowners aren’t going to get three quotes to fix a faucet (and if they do, you don’t want them as customers anyway).

However, you still need to be able to let some jobs go and accept the fact that some people won’t hire you. Sometimes it’s price-related, sometimes it’s not.

As you create the quote, you may have the tendency to think “how much would this customer be willing to pay?” Of course, there can be some value in asking this question, but it usually just leads to underbidding.

So instead, quote jobs based on what it will take to get the job done right and for you to make a profit. Maybe that price is too expensive. And if it is, so what? Let the customer make that decision.

Worst case scenario: you don’t get the job. But at least you aren’t going to be wasting time and effort doing something that isn’t going to pay off.

Now you can use that extra time to go do some marketing, improve your skills, or streamline your business in some way to help make yourself more competitive.

#6 – Do some marketing

The most common reason handymen underbid is fear. They fear that they won’t have any business if they lose their next job. They fear that they’ll lose their precious few customers, get a bad review, or not be able to pay the bills.

And the problem with fear is that it overrides rational thought. It forces you to go against what you rationally know to be best for you.

If this is the case for you, you have two options. Let fear continue to drive your behavior and force you to lose time and money, or put some effort into optimizing your marketing strategy.

Good marketing is the key to getting rid of that fear because it increases demand for your services. When there are more people trying to hire you than you can possibly help, it totally shifts your perspective from fear to abundance.

It’s always a better investment to spend time marketing than to work on a job that isn’t profitable.

#7 – When in doubt, double it.

As a pro handyman, you will come across a wide variety of projects, and it’s impossible to accurately estimate how long things will take every time.

Plus, we all fall victim to the planning fallacy. This is a psychological bias that makes people overly optimistic about how long something will take, often causing them to underestimate how long a project will take – even if they know that similar projects have taken much longer in the past.

Basically, things always take longer than we think they will.

When you’re creating a quote, this bias will inevitably bite you in the ass at some point, causing you to underbid.

So what do you do?

When in doubt, double it.

Come up with what you believe will be a realistic time to complete the project. Then, DOUBLE IT.

This can be uncomfortable for sure. It can even feel unreasonable.

But it works.

Again, the worst thing that will happen is that you won’t get the job. But, at least you’re living with the possibility of charging what you’re worth.

#8 – Have someone else approve your quotes

If you’ve already tried everything and you still find yourself selling yourself short, then it’s time to remove the decision altogether.

If you have a wife, a business partner, or somebody else that can help protect you from yourself, give them the power over your quotes. Let them set your prices.

Since they are likely free of the mental baggage that is costing you money, they are much more likely to quote jobs profitably.

If you can, give them full control. Even let them present the price to the customer if that helps. But at a minimum, at least have them approve each quote before you submit it.

It can be uncomfortable to give up control, but sometimes that is the solution we need to move forward.

Conclusion

Quoting jobs and pricing your services is one of the most challenging aspects of being a professional handyman.

The key to charging what you are worth, and doing it consistently, is all about having the processes, systems, and people in place that will protect you from yourself and allow you to maximize your income.

If you found this helpful, you’ll love my pricing course. Not only will it help you determine how much to charge and give you the best strategies for maximizing your income as a pro handyman, but it will give you the exact phrases to use when talking money with customers so you can present your prices with confidence. Check it out here and gain the confidence you need to stop leaving money on the table.

Boost Profits and Save Time

Handyman Business Mistakes E-book

FREE REPORT REVEALS…

…three common handyman business mistakes and how to avoid them.

Learn why some handyman businesses THRIVE while others STRUGGLE – and the secrets to growing a massively profitable handyman business.

  • Allen June 13, 2014

    Thank you this is very helpful im always underbiding most of my jobs exspecially the small one. I just hate turning down a job or thinking i have overbid a job and not get it. Thank You
    Allen

    • Dan Perry June 16, 2014

      Your welcome, Allen!

  • Chris Maxwell-Gaines June 13, 2014

    Dan, again, very solid stuff!! In my business, I told myself that I had to underbid at the beginning because our services (as you know, rainwater harvesting systems) were non-necessities for people and we needed to get customers. I think we may still be paying off some of those early jobs. LOL.

    Whatever your service is, if there is a need for it, people will pay to have the job done right. This is definitely a serious issue and the reason why 80% of small businesses fail within the first 5 years.

    Keep it up!!

    Chris

    • Dan Perry June 16, 2014

      Great to hear from you again, Chris. And thanks for backing me up on this one. I hadn’t thought of businesses failing because of this but I can certainly see that. It’s sucks that as new business owners we just can’t see the big picture until we make a few (or a lot of) mistakes on quoting.

  • Eric K. June 13, 2014

    Wow, Dan
    This is awesome stuff. I’ve already started applying tip#5 & #6. Marketing has given me the piece of mine to confidently let some jobs go. It’s great for my self worth and self respect.

    • Dan Perry June 16, 2014

      That’s awesome to hear, Eric!

  • John June 13, 2014

    Thanks Dan! I always look forward to your well thought-out advise and great ideas on growing a handyman business.

    • Dan Perry June 16, 2014

      Your welcome, John!

  • James mason June 15, 2014

    Great tips Dan!

    When you get the price right it also helps you to go the extra mile for your clients and deliver amazing customer service, which in turn leads to referral jobs for similar clients who will appreciate your pricing and service as a total package.

    Not saying you wouldn’t offer great service regardless of price, but I think you have a different mind set when you can take the time to really wow someone.

    • Dan Perry June 16, 2014

      Totally Agreed, James. When you charge enough to be worth your time you seem to have a different mindset and you really want to go the extra mile. Thanks for sharing.

  • Jim rose June 16, 2014

    Dan, your point about knowing how much you need per job/hr wage to reach your monetary goals is one of the most important to understand. If you figure what you need to earn to cover your cost of being in business before you turn any profit, you will cure yourself of underbidding. Examples; fuel,insurance, truck cost and repair, mileage,marketing,lunch,storage costs for your supplies, wear and tear on your tools, new tools,trips to supply yards,clothes etc.
    It adds up fast.
    Thanks jim

  • Ron June 23, 2014

    Thanks for the tips Dan, I enjoyed the tips on being prepared for questions from customers. Customers have caught me off guard causing me to reduce fees on my qoutes . Also being concerned if they could afford my pricing has caused me to reduce fees and underbid. Thanks for the tips

    • Dan Perry June 23, 2014

      Yes, being prepared is a big one! It’s tough when you get caught off guard.

  • Akil June 26, 2014

    Thanks for the post…we also run a handyman company in london,i do follow your posts for marketing and its really helpful.regards.

    • Dan Perry June 26, 2014

      Nice to hear from you, Akil!

  • Derek June 29, 2014

    Great stuff Dan, I find myself always under bidding, afraid of loosing the customer. Thanks for your web site it has been a great help for my boat Dock care business !!!

    • Dan Perry June 29, 2014

      Boat dock care? That’s a unique niche. I’ve never heard of that before but that’s probably because I don’t live by the ocean. Glad to hear it has helped you!

  • Francisco August 24, 2014

    Great article and spot on!
    I too have been through this dilemma but for slightly different reasons. When I first started out, I kept thinking to myself, “this is too easy for me to do to charge so much for ________”. But then I had to redirect my thinking. Customers have no clue how to make the needed repairs they need which is why I was sought in the first place.
    I had to force myself out of the guilt of bidding “too much” because the job, in my mind, was too easy.
    I still feel that way about the work I do, but have stopped giving away my skills and service.

  • Anthony March 24, 2015

    Hello
    Im having trouble right now making a profit I think your tips may be my solution.The fear of losing a job so I bid too low and end up making beans. Im gonna take your advice an step outside my comfort zone.I wii comment later and give feedback lol I hope it works.

  • solomon sibanda December 3, 2015

    thanks Dan i find myself struggling when it comes to qoutations

  • solomon August 16, 2016

    thanks a lot iv been doing the same as others were doing it was a mistake thanks Big D

  • Tom January 11, 2017

    Thanks Dan! Underbidding jobs really hurts and rarely does the home owner want to hear that the beams are rotted out. I am hear in the Denver area and it’s one of the fastest growing economies in our country. There is a frenzy of “handymen” popping up and many of them don’t know how to do much. Before starting Small Jobs Denver, I was working for these guys that would under bid everyone by telling the homeowner they would throw basic labor at it for $$$ a day. This ended up backfiring because they started to do more experienced based jobs. With just basic laborers the two mechanics started to go crazy! Just before Christmas they closed their doors. Underbidding can lead to disaster and these dudes ruined my holiday. Cheap will rarely if ever beat quality even when quality is twice as expensive.

  • Michelle April 27, 2017

    Good morning. I am new in the entrepreneur handy “woman” field. I am confident in what I do and have been working industrial maintenance for years. Also, fixing things here and there on the side. Do you have any advice on where I would need to get started on making this more official? Do you have an estimate calculator on certain things at all? How can I get away from undercharging friends and family? This is the hardest one for me. I feel like I’m being a *** when I charge what I think it’s worth. Thanks so much for the info above, it’s definitely helped my way of thinking.

    • Dan Perry April 28, 2017

      Hi Michelle,

      I have two products that solve those exact issues. 1) Turn Your Skills Into Profit (a complete startup guide) and 2) The $100K Handyman – which is a complete pricing guide designed to help you navigate those moral dilemmas of charging what you’re worth.

      Dan

  • Lisa Weeks April 17, 2018

    Great article. My fiance and I recently started up a handyman business and we’re CONSTANTLY underbidding. I get so frustrated because I KNOW we are and he’s all, you start low and then raise up your pricing afterwards. Ugh.. Lol Hopefully your article will give him insight and help us to stop working for peanuts.

  • Don P February 13, 2020

    I’m 68, and just now launching my handyman business this month, after 18 months of retirement. I’m working my way through “Handyman Marketing Machine” and your other materials. You have a knack for presenting concepts in an understandable way. I’m getting so much benefit from your wisdom, Dan…bless you!

    Don P
    Wisconsin

    • Dan Perry February 18, 2020

      Great to hear! Thanks for investing in my trainings Don!

  • JASON M JOYCE August 31, 2020

    Dan, thank you for the these tips and this website! I have been a facilities manager for a utility company in Texas and will be leaving my job shortly to start my own handyman service business. I have been doing a lot of research to help me get started in this wonderful yet scary new opportunity. It has been easy to estimate job cost for a big company with large amounts of capital to get the job done. It is a whole new experience when you are doing it for yourself and your lively hood. Again thank you for the many tips and articles to help us, new to the handyman business.

    • Dan Perry August 31, 2020

      You’re welcome Jason! So glad you’ve found my site helpful.

      -Dan

  • Don Robarge March 2, 2021

    Thanks Dan for this simple lesson, charge what you’re worth and need. Don’t low-ball jobs, It hurts the entire Handi market. Truck, tools, time and trade skills = $40-60++/ Hr. all day ;~)

  • Brad Mann March 3, 2021

    Pricing is always the hardest part of the job for me . Almost 90% of my business is repeat customers so sometimes it’s hard to charge more if I under prices the first job . But your wisdom sure helps thanks

  • Hey Dan!

    You re-released this article via email yesterday. This also happened to be the day I met with a handy-woman to offer my wisdom and consultation on estimating a big job she had been offered. So serendipitous. I applied and shared many of the techniques I’ve learned in your trainings and then told her to “double it”. So interesting to read that in your article later the same day. Appreciate your support so much.

    • Dan Perry March 3, 2021

      That’s awesome. Glad to see you passing some wisdom on.

  • John September 19, 2021

    You should look at the cost of doing business. Some people want to pay amounts that will not allow you to do the job. They want to cover materials but do not take into consideration that you will need to hire labor out of the amount left. They think if they cover materials then it is all your profit. If the amouintg will not pay for labor and leave you with a profit then you cannot do the job for that amount. You will find that you are midway thru the job and there is no money left to hire so you have to finish alone. By the time you are done you will have made nothing. If the amount they wish to pay will not be enough to hire the appropriate amount of people to do it right and timely then they are being unrealistic. They forget when you give them a price it is based on being able to finance the job correctly. Not that you are making more.

Leave a Comment