Why You Should Revisit Your Markup Strategy Annually

Many trades businesses set a flat percentage markup when they first start out and rarely look at it again. This is a dangerous habit because the cost of supplies, fuel, and specialized equipment rentals increases every year. If your markup hasn't moved but your overheads have doubled, you are likely losing money on every job you finish.

The first step to fixing this is to calculate your true break-even point for every hour your team spends on site. You need to account for non-billable time, such as picking up parts, travel between sites, and mandatory tool maintenance. If you don't build these hidden hours into your final quote, you are effectively paying to work for your clients.

Once you know your base costs, you should analyze your last six months of projects to see which types of jobs actually yielded the highest profit. Sometimes, a job looks good on paper because the contract value is high, but the time spent chasing materials or dealing with site delays makes it a loser. Focusing on your most profitable work types allows you to prune the low-margin projects from your schedule.

Finally, don't be afraid to adjust your pricing to match your experience level and current demand. As your reputation for quality builds, your services become more valuable, and your pricing should reflect that shift. If you are constantly overbooked but not seeing the cash in the bank, it is a clear signal that your current markup strategy needs a serious update.