How do I know if I am charging too little as a contractor?

Check your real margins, not your gut. If jobs consistently come in below a 35% gross margin once you account for actual hours and materials, or if your rate has stayed flat while wages, fuel, and materials have risen, you are underpriced. Running recent jobs through a profit calculator makes it obvious.

How much should I raise my contractor prices?

A 5–15% increase is usually absorbed without losing good clients if your work is solid. If you have been underpriced for years, stage larger increases over two steps rather than doubling at once, and then build in small regular adjustments so you never fall far behind again.

How do I tell clients I am raising my prices?

Give existing clients clear notice with a firm start date, lead with the value you deliver rather than apologising, and keep the message short and confident. New quotes simply go out at the new rate. Expect to lose only the most price-sensitive clients, who are typically your least profitable.

How to Raise Your Prices as a Contractor

First, confirm you are actually underpriced

Most contractors who hesitate to raise prices are underpriced and don't have the data to prove it to themselves. They feel busy, so surely the price is fine? But being busy at the wrong price just means you're working hard for too little.

The proof is in your margins. If your jobs consistently come in below a 35% gross margin once you account for real hours and materials, or if your hourly rate hasn't moved while wages, fuel, and materials have climbed for two years, you're underpriced. Don't argue from feel — check the numbers. Run a few recent jobs through the job profit calculator, or rebuild your rate from costs using how to calculate your labour rate.

Once you can see that your real margin is thin or that your costs have outrun your rate, the decision stops being about confidence and becomes about arithmetic. That's a much easier place to raise prices from.

How much to raise — and how often

A single increase of 5–15% is usually absorbed without much resistance if your work is good. Below 5% is barely worth the effort and erodes again with inflation; far above 15% in one jump can feel abrupt to long-standing clients, though it may be justified if you've been badly underpriced for years.

If you're significantly behind, consider staging it — raise meaningfully now, and again in six to twelve months — rather than doubling overnight. And build in regular, modest increases going forward. Contractors get into trouble by holding a rate flat for five years out of fear, then needing a frightening jump to catch up. A small annual adjustment is easier for everyone than a rare large one.

Make sure the new rate genuinely clears your costs and leaves real profit — a raise that still doesn't cover your fully-loaded costs isn't a raise, it's a smaller loss. Cross-check against what contractors charge per hour for your trade and region.

Telling existing clients

New quotes simply go out at the new price — no announcement needed. The delicate part is existing, repeat clients. Handle them directly and in advance:

Give notice with a firm date. "From 1 August, my rates are increasing to reflect rising material and operating costs." A clear date is fair and removes ambiguity.
Lead with value, not apology. You're not asking permission. You're informing a client you value about a change. Reference your reliability and quality, not just costs.
Keep it short. A long, over-explained message reads as guilt. A confident two-line note reads as a professional running a real business.

The tone that works is matter-of-fact. Apologising profusely invites negotiation; stating the change plainly closes it.

Handling pushback — and who you can afford to lose

Some clients will push back. A few will leave. This is not a failure — it's the system working. The clients most likely to walk over a 10% increase are your most price-sensitive, lowest-margin, often highest-hassle clients. Losing one or two of them frees capacity for better-paying work and often improves your net result even though revenue dips slightly.

For the good clients who hesitate, a brief reminder of why they hire you — you show up, you do it right, you stand behind the work — usually settles it. If someone makes you justify every dollar, that's information about the relationship.

The confidence to hold the new price comes from knowing your numbers. When you can see that a job at the old rate was running at 18% margin, you don't flinch when a client questions the new one. Fieldpaid shows your real margin on every paid job, so price increases become a data-backed decision you can defend — not a leap of faith you second-guess the moment someone frowns.

How to Raise Your Prices as a Contractor (Without Losing Your Good Clients)