The Myth of the "Fair Price"

If you’ve been keeping an eye on industry news, you’ve likely seen the US Census statistics regarding our trade. It’s a piece of data that gives us pause: a significant number of plumbing, electrical, and HVAC companies face serious difficulties within their first five years.

The curious thing—and what I want to share with you today—is that this almost never happens due to a lack of talent or a lack of hustle. On the contrary, most contractors are exceptional technicians. The challenge usually lies in a part of the business that no one really teaches us when we’re starting out: the numbers.

The Common Trap: The "Going Rate"

It is very natural that, when starting out, the first thing we do is ask: "What is the competition charging?" If we see the average is $90 an hour, our intuition tells us to charge $85 to stay competitive and win the customer.

It sounds logical, right? But here is where I’d like to suggest taking a moment to analyze it deeper.

The risk with this strategy is that we don’t know that competitor's financial reality. Maybe that company doesn’t pay office rent, or perhaps their trucks were paid off years ago. Or, unfortunately, maybe they aren’t calculating their costs correctly either. If you base your pricing on theirs, you might be unintentionally underestimating the value of your own work.

Let’s Talk About Your "Real Costs"

For your business to thrive and give you the peace of mind you’re looking for, I suggest looking inward first. Before setting a price, consider your Break-Even Point.

Think about all those expenses that run even if you don’t have a single service call that day:

• Your business insurance (General Liability, etc.).

• Truck maintenance and fuel.

• Licenses, permits, and software subscriptions.

• And most importantly: your own salary. (Because you deserve a decent wage for your effort, not just "whatever is left over").

If we add all this up, we often discover that the actual operating cost per hour is higher than we thought. If charging $85 an hour barely covers your overhead, you are left with very little margin to reinvest or handle unexpected issues.

My Advice to You

Don’t be afraid to charge what is necessary to keep your company healthy. Good customers are looking for trust, punctuality, and guarantees; they aren’t always looking for the cheapest option.

When you charge correctly, you aren’t just covering your expenses; you are ensuring that your business will be here tomorrow to continue serving your community. Take an afternoon to review your numbers; you’ll see that adjusting your rates isn’t an act of greed, but an act of responsibility toward your future and your team.