Most home service contractors haven't raised their prices in two or more years. They know inflation happened. They know their material costs went up. They know their competitors are charging more. But they haven't raised rates -- because they're afraid of losing customers.
That fear is costing them more than the customers ever would.
These are directional estimates drawn from IBISWorld SMB research and industry pricing surveys -- not exact figures for your market, but a realistic picture of where each trade tends to sit.
| Trade | Avg Below Market |
|---|---|
| Plumbing | 11% |
| HVAC | 13% |
| Roofing | 9% |
| Electrical | 10% |
| Cleaning | 14% |
| Landscaping | 8% |
| Painting | 12% |
The cleaning and HVAC gaps are largest because both industries have high concentrations of operators who set prices early and never revisit them.
Take a plumbing contractor doing $400,000 in annual revenue. At 11% below market, they're leaving $44,000 per year on the table -- before compounding. Three years underpriced: $130,000 gone.
| Annual Revenue | 8% Gap | 11% Gap | 15% Gap |
|---|---|---|---|
| $200,000 | $16,000 | $22,000 | $30,000 |
| $400,000 | $32,000 | $44,000 | $60,000 |
| $750,000 | $60,000 | $82,500 | $112,500 |
| $1,000,000 | $80,000 | $110,000 | $150,000 |
When contractors raise prices 5--10%, average attrition is 3--7%. That's the real number from Harvard Business Review research on service business pricing -- not 20%, not half your customer base. Three to seven percent.
And the customers who leave are disproportionately your worst ones: the ones who negotiate hardest, pay slowest, and complain most.
Price-sensitive customers -- the ones who selected you partly because you were cheap -- are your lowest lifetime value segment. They're less loyal, more likely to get multiple quotes on repeat work, and less likely to refer.
Your high-lifetime-value customers -- the ones who trust you, refer you, call you first without getting quotes -- are the least price-sensitive. They chose you for quality and relationship. A 10% price increase doesn't move them.
Top-performing contractors review pricing every Q4 and make 3--6% adjustments as standard practice. Over five years, 5% annual increases compound to a 28% cumulative increase.
A contractor doing $400,000 at flat pricing for five years is doing $400,000. The same contractor with 5% annual increases is doing $510,000. Same customer base, same number of jobs, same team. That's $110,000 in additional annual revenue from one habit change.
Run the numbers on a typical example. A roofing contractor has been charging $8,500 for a standard residential re-roof since 2021. Material costs rose over 20% in that period. Rates never moved, because every bid felt like it could be the one that walks.
Now suppose he raises to $9,400 for new customers. Even if his close rate slips a few points, average revenue per closed job jumps by $900 -- more revenue from fewer jobs. And the experience contractors report with modest, well-communicated increases is remarkably consistent: a small dip in close rate, a much larger gain in margin, and almost nobody in the existing customer base leaving over a single-digit increase announced with a short, confident email.
The free RevAnalysis quiz benchmarks your pricing against your trade and shows you what the gap is worth.
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