Pricing Your Services
Underpricing is the most common — and most expensive — mistake local-business owners make.
Why hourly pricing hurts you (and your customer)
Pricing by the hour creates a perverse incentive: the slower you work, the more you make. Customers know this. They squirm when you take longer than expected, and they shop the next job around. Hourly pricing also caps your earning potential at your physical hours in a week.
Worse: it teaches customers to think of your work as time-for-money, not value-for-money. Once you're in that frame, every job becomes a haggle about minutes.
The four pricing models, ranked by leverage
Pick the right one for your business — usually the higher you can move up this list, the better:
- Hourly — lowest leverage, ceiling on income, race to the bottom
- Per-job flat rate — better. You set the price based on scope, you keep the upside of working faster.
- Tiered packages (Good/Better/Best) — even better. The customer picks the tier; you've pre-decided the price.
- Outcome-based / subscription — highest leverage. The customer pays for a result or ongoing access, not your time.
How to actually calculate your price
Forget 'cost plus 30%.' That math is how you stay broke. The real pricing question is: what's it worth to the customer?
A pressure washing job that takes 3 hours might cost you $40 in materials and fuel. Cost-plus pricing says charge $200. But the value to the customer — a clean driveway, curb appeal that earns them a higher home sale price, or a clean entry that improves how their own customers feel walking in — is often closer to $500–$800.
You're not stealing by charging closer to value. You're just stopping yourself from being the cheapest option in a race to the bottom.
The three numbers every local business needs
Even if you only ever do flat-rate pricing, you need to know:
- Your fully loaded hourly cost — wage + payroll tax + workers comp + the share of your vehicle/equipment/insurance allocated to that hour
- Your target margin per job — usually 40–60% gross margin is healthy for service businesses
- Your minimum acceptable job size — below this number, you decline. This protects your time and prevents customer drain.
The Good/Better/Best framework
Once you've nailed flat-rate per-job pricing, the next move is tiered packages. Most customers, when shown three options, pick the middle one. So your "Better" tier should be the package you most want to sell.
"Good" exists to make "Better" look like a reasonable upgrade. "Best" exists to make "Better" look like the smart choice — and to occasionally land you a customer who wants the works.
Concrete example for window cleaning: Good — interior + exterior of front-of-house. Better — Good + screens + sills + tracks. Best — Better + the whole house exterior + a 6-month maintenance plan.
When (and how) to raise prices
Every 12–18 months, raise your prices. Even by just 5%. If you don't, inflation cuts your real income silently. Loyal customers will accept this if you give them notice and explain — most do. The ones who leave over a small price increase weren't great customers anyway.
Don't apologize when you raise prices. Don't over-explain. "Effective [date], our pricing has updated. Here's the new rate for the work you've come to rely on us for." Move on.
Talk to UpEngine
Pricing your services right is upstream of every marketing dollar. Want a second opinion? Talk to us.