A plumber I spoke with last fall hadn't raised his rates since 2022. He wasn't struggling. The phone was ringing, the crew was busy, revenue was up. He thought things were going well.
They weren't.
His labor costs had gone up 12% over two years. Copper fittings were up 18%. His truck insurance renewed at 9% higher. Gross revenue was climbing, but his margin per job had quietly compressed. He was doing more work for roughly the same take-home.
When I asked why he hadn't raised his rates, he said he didn't want to lose clients.
That's the answer almost every trade business owner gives. It's also the wrong framing.
The question isn't whether you'll lose clients when you raise prices. You will. The question is which clients -- and whether losing them is actually a problem.
Why most price increases fail
There are three ways this usually goes wrong.
The first is timing. Owners raise prices in reaction to something -- a bad month, a supplier invoice that stings, a conversation with another contractor. Reactive pricing means you're always catching up. Your costs moved six months ago. You're just now adjusting.
The second is scope. They raise the rate on new jobs but leave existing clients on the old rate. So their most loyal, longest-standing clients -- the ones who've been with them for years -- are the ones still paying 2022 prices. The reward for loyalty is a discount the owner never intended to offer.
The third is communication. They either say nothing and clients find out on the invoice, or they apologize for the increase like they're asking a favor. Neither works. One feels like a surprise. The other signals that you don't fully believe you deserve it.
How to actually do it
Pick a date. Not "soon." A specific date. A lot of trade businesses tie it to January or the start of Q3. That gives you a communication window and a clean break.
Set the number based on what your costs actually did -- not what feels comfortable to ask for. If your combined cost base (labor, materials, fuel, insurance, subcontractors) went up 11% over 18 months, a 5% rate increase still leaves you behind. The number that feels okay to ask for is usually the number that doesn't fix the problem.
Apply it across the board. New jobs, recurring clients, maintenance plan holders. If a client has been with you four years at the old rate, that's not a reason to exempt them. It's a reason to have a short conversation before the invoice changes.
What to say
Short email or text. Not a form letter.
Something like: "Starting July 1, our service rates are going up. It's been [X] years since we last adjusted. We've kept the increase in line with what our costs have actually done over that time. Same crew, same work -- just wanted to give you a heads up before you see it on your next invoice."
No apology. No explanation of inflation. No "we've held off as long as we could." That framing puts you on the defensive. You're not doing anything wrong. Costs moved. Price follows.
Most clients will say nothing. Some will say thanks for letting them know. A small number will call around for a cheaper option. Some of those will leave.
Here's what that actually looks like in practice: if you do $500,000 a year in revenue and raise rates 10%, you can lose 9% of your clients and still come out ahead on margin -- because the clients most likely to push back are usually the ones taking the most time to manage.
The ones who stay are the ones worth keeping.
Run this check before you decide you don't need to raise prices
Pull your last 12 months of invoices. Look at your average job value. Then look at what your material costs and labor costs were 18 months ago versus today.
If costs went up and your average invoice value didn't move, you have a pricing problem. It just hasn't shown up as a cash flow problem yet. It will.
Reply and tell me your trade and how long it's been since your last rate increase. I'll tell you what I would look at first.
Kevin Chan
The Ops Shortcut by ChanAutomation
http://www.chanautomation.com