Business Growth Accelerator/Business Development/How to Price Your Home Service Business Services for Maximum Profitability

How to Price Your Home Service Business Services for Maximum Profitability

Thursday, February 02, 2023

Share on:

Social Sharing Links

Disclaimer: This post may contain affiliate links. We may earn a commission if you take advantage - at no additional cost to you - of any offer promoted in this blog post.

One of the most important aspects of running a home service business is setting the right prices for your services. Your prices can make or break your business, so it's essential that you get them right. But how do you determine what prices to set? This guide will walk you through all the steps necessary to come up with a pricing structure that works for both you and your customers.

Understand Your Market

When pricing your services, it’s important to know what the market will pay for similar services. Knowing the going rate in your area can help you set competitive prices but still provide enough revenue to cover costs and leave room for profits. It may also be helpful to survey local competitors so you know how others are pricing their services. Research is vital because you don’t want to price yourself out of the market or undervalue your work.

My mentor, Dan Kennedy, advises never to be the cheapest in the market. A race to the bottom doesn't benefit you and won't benefit your customer. I don't recommend discounts either. Instead, focus on the value of your services and how you can exceed expectations. Use strategic pricing tactics such as tiered pricing and bundle offerings to meet customer needs while making a profit. Ultimately, you want to create ongoing value for your clients.

By pricing correctly, you will be able to attract the right type of customers who are willing to pay for the value they are receiving. It can also help you establish pricing expectations, which will benefit your business in the long run. 

Remember, if a customer isn’t willing to pay what you’re offering, it might be worth re-evaluating whether or not they are the right customer for your business.

Know Your Expenses and Overhead Costs

Your overhead costs include anything related to running your business, such as marketing expenses, office rent, insurance premiums, etc. When setting prices, you should factor these expenses into the cost of each service you offer. To ensure that you make a profit on every job, it’s important to calculate all direct expenses associated with each project and add those costs to the final invoice price. This includes materials and any labor fees as well as other costs like transportation and storage fees, if applicable.

Let's consider this simple example:

It costs you $1200 to perform your service and you want a healthy 70% profit margin. You charge $4000 for your time, skill, and knowledge. Your sales team books 20 jobs a month consistently. That is a monthly profit of $56000. If you offer a 20% discount to compete with Joe down the street. That cuts your profit to $40,000—a difference of $16000. You would have to do 8 more jobs for a total of 28 jobs a month just to meet the profit levels of your standard pricing.

To further compound the problem. Those eight additional jobs may require overtime. Further increasing the cost per job and lowering your profits.

Taking it in the other direction:

Let's increase your fees by 10% to a total of $4400—that is an additional $8,000 in monthly profit. To maintain the same level of profitability, you would only need to complete 17.5 jobs a month. Now think: do you feel that you would lose 2.5 customers for a measly 10% increase in price?


Not if the value is there.

The bottom line is this: if you can charge more and still provide the same high level of service, then why not? The increase in profit would be far more beneficial to your business by allowing you to take on fewer jobs and still make the same amount. Your quality of life will improve and you will have more energy to put into each job and allow you to scale faster.

Create Different Price Tiers

Creating different pricing tiers can be an effective way to increase profits while still providing customer value. For example, you might offer basic services at one price point, premium services at a higher price point, and VIP packages at an even higher level than that. This provides customers with options based on their budgets and allows them access to more advanced features if they are willing to pay extra.

It also prevents customers from choosing only basic services, thus increasing overall profitability by providing customers with multiple choices when purchasing from your business.

By creating different pricing tiers, you're also making it easier for customers to find the exact services they need without searching your entire product catalog. This makes it easier and more likely for them to purchase from you, increasing your business's profits. 

Upsell and Cross Sell

Upselling and cross-selling are potent tools in a home services business' pricing structure. Upselling offers customers higher-tiered products or services that can better solve their unique situation. This can increase the total value of the sale while providing additional benefits to the customer.

Cross-selling, on the other hand, involves offering related items that could benefit the customer in addition to their initial purchase, such as installing extra insulation when replacing an air conditioner.

By integrating upselling and cross-selling into your pricing structure, your business can increase its sales volume and profitability by taking advantage of the additional opportunities for customers to purchase more products or services.

A great example of an upsell for a roofing company would be offering a roof cleaning service along with installing or repairing their roof. This provides the customer with an added benefit in extending the life of their roof and potentially saving money on costly repairs in the long term. A cross-sell for this same company could be offering various types of siding materials, gutter protection, or even solar panels as part of the package.

Similarly, a home services business that installs air conditioners could offer their customers an upsell to include insulation installation and duct cleaning to maximize the efficiency of their system and reduce energy costs. They could also cross-sell additional products, such as whole-home dehumidifiers, air purifiers, and programmable thermostats.

By providing these additional services to customers, businesses can increase their average order value and provide them with an all-in-one solution that maximizes the efficiency of their home and saves them money in the long term. Offering upsells and cross-sells allows businesses to maintain healthy profits and top-tier services.

To wrap it all up.

Pricing is one of the most important aspects of running a successful home service business – get it wrong, and you could make less than minimum wage or lose money on projects! With research and careful consideration of factors like market rates and overhead costs, it is possible to create a profitable pricing structure that will keep customers returning while allowing you to grow your business over time!

Suppose you need more insight into increasing your profitability. I recommend you check out my free book, Profit Secrets: The Underground Guide to Finding a Ridiculous Amount of Profit in Your Business without spending a dime on ads. You can get your free copy by clicking here.

And if you are looking for a simple calculator that will show you what your absolute minimum service charge should be, go here to get access.

To your success


Hi, I'm Brandon

Owner Of BKXX Enterprises, LLC

"Meet the Driving Force Behind BKXX Enterprises: Brandon Garcia, a Dedicated Advocate for Local Service Businesses.

With a wealth of experience and a passion for community growth, Brandon leads the charge in empowering local service businesses to dominate their markets.

Through insightful strategies and proven tactics, this blog is your go-to resource for taking your local business to new heights. Join Brandon in the journey towards local market conquest!"

Profit Secrets Ad

Redefining Sales: A Fresh Approach to Client Relationships

Direct Response TV Marketing: Get A Flood Of Customers 30-Seconds At A Time

Do Blogs Increase Website Traffic? The Definitive Answer!

Boost Your Site: Most Effective Ways To Increase Traffic

Is Your Google Business Profile a TICKING TIME BOMB?


If you want to pay more for your leads, that's your business. If you want to pay less that's mine.

Contact us today to learn how BKXX Marketing can reduce your cost per lead and help you dominate the local market.