How to Raise Prices as a Contractor: Math, Letter, Scripts

How to raise prices as a contractor, in short: price this year's cost increases into your cost per billable hour (BLS shows consumer prices up 3.7% and construction wages up 3.5%), raise prices at least once a year, give customers about 30 days' notice, honor open quotes, and hold maintenance plan prices until renewal. In our example, a 6% increase lifts net margin from 6.4% to 11.7%.

More on this topic: Pricing, estimates and getting paid, every guide in one place.

Most small shops raise prices too late and too little, usually after a bad quarter shows the margin is gone. Costs go up every year whether you raise prices or not: wages, parts, insurance, trucks and software. This guide shows how to size an increase from your costs, what it does to profit, where to put it, and exactly what to tell customers. The inflation figures are from BLS releases we checked in October 2026.

Key takeaways

• Start from costs, not competitors. Work out how much your labor, parts and overhead rose, weighted by how much each costs you.
• Latest BLS numbers: consumer prices up 3.7% in the 12 months to September 2026; private construction wages up 3.5% in the 12 months to June 2026.
• Standing still is a price cut. In our example, a 4% cost rise with no price change cuts net margin from 10% to 6.4%.
• Raise at least once a year, on a set date, plus whenever a big supplier increase lands.
• Don't raise everything evenly. Fix underpriced tasks first, and protect maintenance plan members until renewal.
• Tell customers plainly, once, with a date, and train the people who answer the phone.

How much should a contractor raise prices?

At least enough to cover this year's cost increases at your target margin, and more if your margin is already too thin. Weight each cost by its share of your spending, then apply the rise you actually see in your payroll, supplier price letters and renewals. Where you don't have a figure of your own, use the BLS figures as a starting point.

Example numbers; use your own. To hold a 10% net margin, revenue has to reach $935,950 ÷ 0.90 = $1,039,944, a 4% increase. To lift the margin to 12%, it's $935,950 ÷ 0.88 = $1,063,580, about 6.4%. If you haven't worked out your hourly costs yet, start with cost per billable hour and job costing, then rerun this year's wages, truck and overhead through the free labor rate calculator.

What does a 6% price increase do to net margin?

Using the example shop above, with labor and parts moving with the number of jobs and overhead fixed:

Two lessons. Doing nothing costs this shop about $36,000 in a year. And with a 6% increase, it could lose about 5% of its jobs and still make what it made last year, with less work. Most shops lose far fewer customers than they fear, but run the numbers for your own costs before you decide.

How often should a contractor raise prices?

Once a year at a minimum, on a date you pick and keep, such as January 1 or the start of your slow season. Add a mid-year change only for a large, specific jump, like a supplier raising a major part. Small regular increases are easier for customers and staff than a big one every few years. BLS publishes consumer price data monthly and the Employment Cost Index quarterly (the next ECI release is October 30, 2026), so put a reminder on the calendar to check both before your price review.

Where should the price increase go?

Not evenly across the board. Look at profit by task and fix the weakest prices first:

• Underpriced flat rates. Tasks your job costing shows below target margin get the biggest rise. See flat rate vs time and materials for the formula.
• Service call or diagnostic fee. Often left untouched for years; see how much to charge for a service call.
• Parts markup, so supplier increases flow through automatically. Check what a new markup earns as margin with the free markup vs margin calculator.
• After-hours and emergency premiums, where you work nights your competitors won't.
• Minimum charges on small jobs that tie up a truck for half a day.
• Commercial and time-and-materials rates, with written notice as your agreements require.

Leave alone, for now: open quotes until they expire, and maintenance plan members until their renewal date. Both are promises, and keeping them is part of why people pay you more.

How do you tell customers about a price increase?

Once, plainly, about 30 days ahead, with the date and what isn't changing. Don't apologize at length or blame one cause. Send it to active customers and plan members; new customers just see the new price.

Price increase letter or email

Subject: Our 2027 prices

Hi [first name],

Thank you for trusting [Business name] with your home. Starting [January 1, 2027], our prices will go up by about [6]% on average. Wages for our technicians, parts and insurance have all risen this year, and we'd rather adjust once, clearly, than cut corners on the work.

What isn't changing: any quote we've already sent you is good until the expiry date on it, and if you're on a maintenance plan, your price stays the same until your plan renews on [date].

If you've been putting off a repair or tune-up, book before [date] at today's price: [booking link] or [phone].

Thank you,
[Owner name], [Business name]

Short text version (for customers who agreed to texts)

“[Business name]: a heads-up that our prices go up about [6]% on [Jan 1]. Quotes already sent are honored until they expire, and plan members keep their price until renewal. Book at today's rate before [date]: [link]. Reply STOP to opt out.”

What should CSRs and technicians say about higher prices?

Give them the same three facts and let them say it in their own words: the new prices are fair for the work, open quotes and plan prices are protected, and a maintenance plan is the way to lock a price in.

CSR, when a caller says “it was cheaper last time”: “You're right, our prices went up on January 1, about 6% on average, because our costs did. Your technician will give you the exact price before any work starts, and if you're on our maintenance plan, you'd keep the old price until renewal.”

Technician, presenting a repair: “This repair is $477, all in, with our one-year warranty. You'll know the full price before I start, and it won't change if the job takes longer.”

Technician, when the customer pushes back: “I understand. If you'd like, I can show you the options, from the simplest fix to the full replacement, and you pick.”

Never let a tech discount the new price on the spot to avoid an awkward moment. Give them options to offer instead, such as a smaller repair, a plan membership or a different time.

Which price increase mistakes cost contractors the most?

• Waiting for a bad year, then raising 15% at once.
• Copying a competitor's rate instead of pricing from your own costs.
• Raising labor but not parts markup, or the reverse.
• Changing a signed quote or a plan member's price mid-term.
• Forgetting the places prices live: the price book, phone scripts, website, ads and the ranges your phone team quotes.

Where CrewRobin fits

CrewRobin keeps labor, parts and flat-rate services in one price book that you add to quotes, so the new year's prices go in one place. Good, better, best quotes let a customer who balks at one price pick a smaller option and sign online. The AI receptionist quotes only the price range you set per job type and says the technician confirms on site, so update those ranges on the day prices change. Maintenance plans are billed yearly, monthly or per visit, which makes a member's locked price easy to keep until renewal.

Frequently asked questions

How often should a contractor raise prices?

At least once a year, on a set date, plus whenever a major supplier increase lands. Small annual increases tied to your costs are easier for customers to accept than a large one every few years.

How much should I raise my prices?

Enough to cover your cost increases at your target margin. Weight your labor, parts and overhead increases by their share of costs; in our example a 4% cost rise needs about 4% to hold a 10% margin and about 6.4% to reach 12%.

How do I tell customers about a price increase?

Tell them once, about 30 days ahead, by email or by text if they agreed to texts. Give the date and the average increase, and say what isn't changing: open quotes and maintenance plan prices until renewal.

Will I lose customers if I raise prices?

Some, possibly, but fewer than it takes to hurt. In our example a 6% increase leaves the shop as profitable as last year even if it loses 5% of its jobs.

What is the current inflation rate for contractors?

BLS data checked in October 2026 show consumer prices up 3.7% in the 12 months to September 2026 and private construction industry wages up 3.5% in the 12 months to June 2026. Your own costs may differ.

Put it to work this week

Put next year's prices in one price book and send quotes with options customers can pick from. CrewRobin is free until your first 10 booked jobs, no card up front. Start free or see pricing.

Sources

Figures from outside CrewRobin were checked against these pages in October 2026. Most industry benchmarks come from vendors and agencies, so treat them as ranges, not rules.

• BLS: Consumer Price Index, September 2026 (released Oct. 14, 2026)
• BLS: Employment Cost Index, June 2026 (released July 31, 2026)
• BLS: ECI wages and salaries, private construction industry (series CIU2022300000000A), June 2026