For most contractors, raising prices feels riskier than it should. There’s a nagging worry that a rate increase will send loyal clients running to a competitor, so the increase gets put off long after it’s needed. Meanwhile, materials cost more, fuel costs more, and skilled labor is harder (and pricier) to find. At some point, holding your prices steady stops protecting your customers and starts eating into your ability to do good work at all.
The good news: contractors who raise prices thoughtfully rarely lose the clients worth keeping. The clients who value your work understand that costs go up. What matters is getting the timing and the delivery right.
When to Raise your Prices
There’s no single trigger, but a few signals tend to show up together when it’s time:
Your costs have moved and your prices haven’t. If lumber, copper, fuel or subcontractor rates have climbed since you last set your pricing, your margins are quietly shrinking on every job. Review your numbers at least once a year, not just when a client complains.
You’re consistently underbidding. If you’re busy but not profitable, and jobs routinely run over budget on your own estimate, that’s not a scheduling problem. That’s a pricing problem.
You’ve added value. New certifications, better equipment, faster turnaround, an expanded service list; all of these justify a higher rate, and clients are generally more receptive to an increase tied to added value than one tied purely to cost.
It’s been more than a year. Even without a single dramatic cost spike, a rolling annual review keeps small adjustments small, rather than letting them build into one uncomfortable jump.
The one time to avoid a mid-project increase is, obviously, mid-project. Honor the price you quoted for work already agreed, and build your new rate into the next estimate or contract instead.
How to tell your Clients
This is where a lot of contractors lose more goodwill than the price change itself would ever cost them, usually by saying too little, too late, or nothing at all until the new invoice lands.
Give real notice. A price change shouldn’t be a surprise on an invoice. Weeks of notice, not days, gives clients time to plan and shows you respect their budget as much as your own.
Explain why, briefly. You don’t need to open your books, but a short, honest reason (rising material costs, increased demand for your time, new equipment or training) makes the increase feel fair rather than arbitrary.
Say thank you. Clients who feel valued are far less likely to push back hard on a fair increase. A line acknowledging their business, especially if you reference how long you’ve worked together, goes further than it should.
Personalize it where it counts. A form letter blasted to every client on file reads exactly like what it is. For your best or longest-standing clients, a short personal note (even added to a template) makes the difference between “another price hike” and “they clearly still value working with me.”
Leave the door open. Make it easy for clients to ask questions, by phone, email or in person. Most pushback softens considerably once someone feels heard rather than informed.
After you send it
Expect a mixed reaction. Some clients won’t say a word. Others will want to talk it through, and a few may push back hard. None of that means the increase was wrong; it means you’re dealing with real budgets and real people.
Listen to the pushback rather than getting defensive. If a longstanding client is genuinely strained by the new rate, consider a short-term option: honoring your old rate on a job already in the pipeline, or offering a scaled-back version of the work at a lower price point. Flexibility here isn’t the same as backing down; it’s what turns a one-time price conversation into a client who sticks around for years.
Getting the Wording right
The hardest part usually isn’t deciding to raise prices, it’s finding the right words. Joist’s guide to writing a price increase letter has several ready-to-use templates, along with prompts for drafting your own version quickly if you’d rather start from a blank page.
Whichever route you take, the underlying message stays the same: give notice, explain the reason, and thank the people who’ve kept your business running.
Raising your rates isn’t a failure to plan ahead. It’s a normal part of staying in business long enough to keep doing the work you’re good at.
This article was contributed by Joist, an all-in-one estimating, invoicing, and payments app built for contractors. Joist helps trade professionals create accurate estimates, get paid faster, and keep client records organized from the jobsite or on the go. Learn more at joist.com.