How to stop underbidding jobs and start charging what you deserve

Underbidding jobs sucks. Not only does it cost you money, but it can also make you feel defeated and demotivated because you are essentially giving away your most precious resource (time) for free.

During the first couple years of running my handyman business, I lost a lot of money by underbidding jobs. The worst part is that I would often know I was underbidding a job in the moment, and still do it anyway.

It did this more times than I’d like to admit, but over time I learned a few strategies that helped me overcome my natural tendency to underbid, and I finally started charging what I was worth (and even a bit more at times).

This boosted my income, my confidence, and how much I enjoyed my business. Learning to quote with confidence is empowering.

Of course, there is more to mastering your pricing than I can share in one article, but here are seven tips you can start using right now to quote your next job with confidence.

#1 – Understand your numbers

The first, and most important tip, is to understand your business from a financial perspective. A good place to start is by answering the following questions:

• How much do you need to make per hour to hit your income goals?
• How many billable hours do you need to work each week on average to hit your income goals?
• How much does it cost you to do a free quote?
• What is the minimum amount you must charge to make money on small jobs?

Most new business owners can’t answer these questions despite the fact that they are fundamental to actually running a profitable business.

If you don’t know the answers yet, that’s OK. But your next step is to figure out the answers.

Once you understand how much money you need to make each hour, each day, and each week, you’ll have a fundamental shift in how you look at pricing. Instead of pricing jobs willy nilly or going off of what others charge, you’ll know exactly how much you must charge in order to run a sustainable business.

This is often enough to stop the underbidding by itself.

I have an in-depth pricing course that will guide you step by step to figure all of this out and more. If you don’t know your numbers, do yourself a favor and go here to and get that course right now.

#2 – Be prepared for tough questions

Many customers will put you on the spot with pricing. They’ll want you to give them an estimate over the phone or will rush you to give them a price while you are still looking over a job. They may even ask for a discount.

If you’re not prepared for these situations, you may give answers that you regret. I know I’ve done this many times myself.

Here are a few examples of questions you’ll want to be prepared for:

• Can you give me a ball park estimate?
• What is the best price you can give me?
• Do you offer a cash discount?
• Do you mark up materials?
• What if I buy the materials?
• Do you have a discount for veterans or the elderly?

Being prepared will not only help you avoid common pricing mistakes, but it will also give you more confidence when talking money with customers. Customers will respect and trust you more if you are confident, and will be more likely to hire you because of that.

#3 – Have a minimum service charge

As a handyman, you will come across a lot of very small jobs. Some jobs may only take fifteen minutes to complete.

You could charge your customers very little (or nothing at all) for these projects and then make the money back on large projects. This is a common strategy for contractors because it plays on people’s need to reciprocate. By giving customers a deal on small jobs, they are much more likely to hire you for their next big project because they have a need to pay you back.

However, there’s a major problem with this strategy – It only works if your bread and butter is large projects like kitchen and bath remodels.

If your business is anything like my handyman business, you make the vast majority of your money on those two to four-hour jobs. That means that you need to make a profit on small jobs and can’t afford to do them at a discount or for free.

That’s where a minimum service charge comes in. It guarantees that even the smallest jobs are worth your time.

#4 – Don’t give quotes on the spot

This goes along with tip #2 above, but it’s very important so I wanted to emphasize it.

Unless you are quoting a job you’ve done a thousand times and you know exactly how much to charge, never give a quote on the spot.

Instead, let your customer know that you will get back to them with a quote. At a minimum, go out to your vehicle and compose a quote without the customer hovering over you. This will allow you to collect your thoughts and formulate a quote that actually makes sense.

In fact, don’t even give a ballpark estimate because that will anchor the customer to that price. Once they hear a price, it’s difficult for their minds to accept significant changes to it.

Please note that this only applies to jobs that you are actually submitting a quote on. In many cases, especially for small jobs and jobs where you are charging hourly, it’s far less stressful to communicate price as soon as possible as described here.

#5 – Let some jobs go

The most profitable handymen and contractors know that if they are getting every job they quote, then it’s time to raise their prices.

Many go by the rule that you should only land one job for every three jobs you bid on, otherwise your prices are too low. I think this is a good rule of thumb for contractors doing large projects, but not for handyman services. As a handyman, you should expect a higher success rate because most homeowners aren’t going to get three quotes to fix a faucet (and if they do, you don’t want them as customers anyway).

However, you still need to be able to let some jobs go and accept the fact that some people won’t hire you. Sometimes it’s price-related, sometimes it’s not.

As you create the quote, you may have the tendency to think “how much would this customer be willing to pay?” Of course, there can be some value in asking this question, but it usually just leads to underbidding.

So instead, quote jobs based on what it will take to get the job done right and for you to make a profit. Maybe that price is too expensive. And if it is, so what? Let the customer make that decision.

Worst case scenario: you don’t get the job. But at least you aren’t going to be wasting time and effort doing something that isn’t going to pay off.

Now you can use that extra time to go do some marketing, improve your skills, or streamline your business in some way to help make yourself more competitive.

#6 – Do some marketing

The most common reason handymen underbid is fear. They fear that they won’t have any business if they lose their next job. They fear that they’ll lose their precious few customers, get a bad review, or not be able to pay the bills.

And the problem with fear is that it overrides rational thought. It forces you to go against what you rationally know to be best for you.

If this is the case for you, you have two options. Let fear continue to drive your behavior and force you to lose time and money, or put some effort into optimizing your marketing strategy.

Good marketing is the key to getting rid of that fear because it increases demand for your services. When there are more people trying to hire you than you can possibly help, it totally shifts your perspective from fear to abundance.

It’s always a better investment to spend time marketing than to work on a job that isn’t profitable.

#7 – When in doubt, double it.

As a pro handyman, you will come across a wide variety of projects, and it’s impossible to accurately estimate how long things will take every time.

Plus, we all fall victim to the planning fallacy. This is a psychological bias that makes people overly optimistic about how long something will take, often causing them to underestimate how long a project will take – even if they know that similar projects have taken much longer in the past.

Basically, things always take longer than we think they will.

When you’re creating a quote, this bias will inevitably bite you in the ass at some point, causing you to underbid.

So what do you do?

When in doubt, double it.

Come up with what you believe will be a realistic time to complete the project. Then, DOUBLE IT.

This can be uncomfortable for sure. It can even feel unreasonable.

But it works.

Again, the worst thing that will happen is that you won’t get the job. But, at least you’re living with the possibility of charging what you’re worth.

#8 – Have someone else approve your quotes

If you’ve already tried everything and you still find yourself selling yourself short, then it’s time to remove the decision altogether.

If you have a wife, a business partner, or somebody else that can help protect you from yourself, give them the power over your quotes. Let them set your prices.

Since they are likely free of the mental baggage that is costing you money, they are much more likely to quote jobs profitably.

If you can, give them full control. Even let them present the price to the customer if that helps. But at a minimum, at least have them approve each quote before you submit it.

It can be uncomfortable to give up control, but sometimes that is the solution we need to move forward.

Conclusion

Quoting jobs and pricing your services is one of the most challenging aspects of being a professional handyman.

The key to charging what you are worth, and doing it consistently, is all about having the processes, systems, and people in place that will protect you from yourself and allow you to maximize your income.

If you found this helpful, you’ll love my pricing course. Not only will it help you determine how much to charge and give you the best strategies for maximizing your income as a pro handyman, but it will give you the exact phrases to use when talking money with customers so you can present your prices with confidence. Check it out here and gain the confidence you need to stop leaving money on the table.