Are You Leaving 15-30% Profit on the Table?

5 Warning Signs You're Underpricing | ANOH Strategic Group

Why This Matters: Most trade contractors lose 15-30% of potential profit due to underpricing. This guide reveals the five most common signs that you're leaving money on the table.
⚠️ WARNING SIGN #1: You're Always Busy But Never Profitable

What It Looks Like:

  • Calendar is completely full
  • Crew working 50+ hours/week
  • Revenue growing month over month
  • Bank account not reflecting the growth

Why It Happens: You're pricing to stay competitive without calculating whether those prices actually cover your costs plus profit.

✓ The Fix: Calculate your true hourly cost (labor + overhead + materials + profit margin). Price accordingly, even if it means losing the bottom 20% of price-shopping customers.
⚠️ WARNING SIGN #2: You Discover Losses AFTER Job Completion

What It Looks Like:

  • Job seemed profitable when you bid it
  • Customer paid the invoice in full
  • After accounting for actual hours and materials, you lost money

Why It Happens: You're estimating based on best-case scenarios instead of real historical data.

✓ The Fix: Implement job costing that tracks ACTUAL hours, materials, callbacks, and overhead. Use real data to inform future bids, not optimistic guesses.
⚠️ WARNING SIGN #3: Your "Labor Rate" Doesn't Include Actual Labor Costs

What It Looks Like:

You know what you pay employees per hour, add a markup, and call that your "labor rate." But you're not accounting for payroll taxes (7.65%), workers comp, insurance, benefits, PTO, training time, drive time, or non-billable hours.

Example: You pay Joe $25/hour and charge $50/hour, thinking you make $25 profit. But after hidden costs, Joe actually costs you $38-42/hour, and you're only making $8-12/hour.

✓ The Fix: Calculate TRUE fully-burdened labor cost: Base wage ($25) + Payroll taxes ($1.91) + Workers comp ($2) + Insurance ($3) + Non-billable factor (×1.3) = $41.48/hour. If you want 40% profit, charge $58+/hour, not $50.
⚠️ WARNING SIGN #4: You Match Competitor Pricing Without Knowing Your Costs

What It Looks Like:

"Everyone charges $X for this service, so we do too" - but you have no idea if $X covers YOUR specific costs.

Why It Happens: Fear of being "too expensive" drives pricing instead of math.

✓ The Fix: Price based on YOUR costs, not competitor prices. If your price needs to be higher, either accept that or fix your cost structure. Don't subsidize customer purchases with your personal income.
⚠️ WARNING SIGN #5: Your Owner's Pay Is Lower Than Your Employees' Pay

What It Looks Like:

  • Techs earning $50-70K/year
  • You're taking home $40K after working 60+ hours/week
  • "I'll pay myself more when the business is more established" (but it's been 5+ years)

Why It Happens: Your pricing doesn't include proper owner compensation. You're treating your time as free.

✓ The Fix: Factor in market-rate owner compensation BEFORE calculating profit. If you'd pay a GM $80K to run your business, include $80K in overhead calculations. Then add profit margin on top.

If You Identified With 2+ Warning Signs, You're Likely Underpricing by 15-30%

Three Immediate Actions:

1. Calculate your true costs (labor, overhead, materials)
2. Review your last 10 jobs for actual profitability
3. Adjust pricing on new quotes (test 20% higher)


Need Help?

ANOH Strategic Group specializes in helping trade businesses ($250K-$2.5M) uncover hidden profit.

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