How to Know You’re Charging Enough

By Michael D. Rubin, CEO & Founder · Updated September 2026 · 704 words

You are probably not charging enough if you win almost every job you quote, customers rarely push back on price, your prices have not moved while your costs have, or you set prices by adding a markup to cost rather than by what the work is worth to the customer. Pricing is one of the quickest ways to raise profit, and for an owner who may sell, one of the quickest ways to raise the company's value.

Owners worry about pricing in both directions: charge too much and lose customers, charge too little and work hard for thin margins. The second mistake is more common, and harder to see from the inside.

Signs you are underpricing

• You win nearly every bid, or customers accept quotes without negotiating.
• You have a waiting list or backlog that keeps growing.
• Your prices have stayed the same for years while wages, materials and insurance rose.
• Competitors with similar quality charge noticeably more.
• Your margins are lower than those of comparable companies in your trade.
• Your best customers never ask for a discount because they already know they are getting a good deal.

Price on value, not just on cost

Cost-plus pricing, where you add a set markup to what the work costs you, is simple, but it ignores what the customer is actually buying. Customers pay for speed, reliability, expertise, warranties and the confidence that the job will be done right. Two companies with the same costs can charge very different prices because one delivers more of those things.

Look at pricing as a whole rather than item by item. Many profitable companies keep their core service competitively priced and earn more on what surrounds it: maintenance agreements, after-hours and emergency work, premium options, faster turnaround and add-on products. Offering tiered choices, such as a standard, better and best option, lets customers who value more pay for more.

Why small price changes matter so much

A price increase that costs you nothing extra to deliver goes straight to profit. As an illustration only: a company with $10 million in revenue that raises prices by 2% without losing volume adds $200,000 to annual earnings. Companies in the $3 million to $100 million revenue range most often sell for three to seven times adjusted EBITDA, which is operating profit before interest, taxes, depreciation and amortization, after owner-specific and one-time costs are added back. At that range, the extra $200,000 could be worth $600,000 to $1.4 million at sale, assuming nothing else changes. How buyers settle on a multiple is explained in what valuation multiple buyers might pay.

How to raise prices without losing good customers

• Test the new pricing on new customers or one service line before changing everything.
• Give existing customers notice, and explain what has changed in your costs or service.
• Consider holding prices for a short period for your most loyal accounts.
• Train your team to present the price with confidence rather than apologizing for it.
• Track win rates, cancellations and customer losses monthly, and adjust if the numbers move.
• Review prices at least once a year so increases are small and expected, not large and sudden.

How buyers read a recent price increase

Buyers credit price increases that have held. A higher price in place for a full year, with customer counts and volume steady, is strong evidence the company was undercharging and can sustain the new level. An increase made a few months before a sale will be questioned, because the buyer cannot yet see whether customers will stay. That is another reason to act on pricing well ahead of an exit; our answer on what you can do in the next year to increase your valuation puts pricing alongside the other levers.

If the experiment fails and you lose customers you wanted to keep, adjust. Pricing is not a one-time decision.

How MDR & Associates looks at pricing

In a valuation, the firm looks at margins against the company's own history and what buyers expect for the industry, because underpricing often shows up as a margin gap. A formal business valuation can show whether pricing is holding your value down. For a quick view of where your company stands, request a free valuation snapshot.

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Questions owners ask next

Will raising prices drive away my best customers?

Usually not, if the increase is reasonable, explained and paired with good service. The customers most sensitive to price are often the least profitable ones. Track who leaves after an increase; losing a few low-margin accounts while profit rises is often a good trade.

How often should I review my prices?

At least once a year, and whenever a major cost such as wages, materials or insurance changes. Regular small adjustments are easier for customers to accept than a large increase after years without one, and they keep margins from quietly shrinking.