Why lower prices don’t always mean you win

contractor with pencil on wood - Best Contractor Estimating & Invoicing Software - Hearth

Pricing is one of the most complicated parts of owning and operating a home improvement business. As the market becomes more complex because of the labor and supply issues facing American businesses, it’s important to remember why reviewing job pricing as often as possible is important to secure the cash needed to grow a business.

Offering financing through Hearth to your customers helps them afford the necessary maintenance, repairs, or project of their dreams without having to drop your prices or pay per-loan fees to traditional lending programs.


  • How prices are eating into your profits

  • How customer perception can affect your pricing strategy

  • Comparison gets in the way of the right pricing

  • Using the right tools to close deals

  • Tactics on how to find the right price for your jobs

Prices might be eating into profits

There are a lot of reasons why a company’s prices might be lower than their competition. Some think they’re offering the right price for their projects but don’t know they could be charging a lot more because of the value they offer. Some have not adjusted their pricing according to updated material and labor costs. Or, some just think they’re going to win more jobs by undercutting their competition. 

Whatever the reason, they’re more than likely hurting their business by not charging enough. Lower prices mean that the cost for labor, building materials, and other overhead to complete projects are cutting into profits at a higher rate than the competition.

Contactors can also eat into their margins by not adjusting the markup on materials that sit longer in storage. The longer something sits on a shelf without being used, the more money it’s costing the business. So, why charge the same percentage markup for all materials?

Lower prices affect customer perception 

Customers don’t always go for the lower price. The value that a company brings to a homeowner can make the difference between a closed deal and another wasted lead. If a company prices itself too low, they run the risk of seeming amateurish or not having the right level of quality. Homeowners are willing to pay more to make sure they have the best work for their properties whether it’s their forever home or they’re trying to sell soon. 

Stop comparing yourself to others

A contractor may be tempted to price against their competition. However, the best way to price jobs is based on the value a company brings to a project and can cover the overhead costs it takes to sell and complete a job. This means that if a contractor knows their expertise and craftsmanship are worth $100/hour, then that’s what they should charge. Every company, market, and price point is different. 

Get the right tools

Hearth members have access to the tools they need to close more jobs and get paid faster. Our financing partners give contractors the power to offer monthly payments to customers for their home improvement projects. Hearth also includes digital contracts and payments tools to speed up your processes. On top of that, Hearth gives you the support you need to succeed with a personal onboarding specialist and customer success team ready to answer your questions. 

How to price your jobs

In 2021, we hosted a webinar with Ruth King aka The Profitability Master. She helps home improvement companies across the country make smart money decisions. In this webinar, she explains her formula for getting pricing right. Click on the video below to learn Ruth’s pricing strategy. Skip to 9:25 for the section on pricing formula.

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