How to Raise Your Prices: A Staged Plan for Trade Shops

Step 1: Rerun the rate and size the gap

Don't raise by a round number or by the inflation rate. The consumer price index for all items rose 3.7% over the 12 months ending September 2026 (BLS), but that is an average across what urban consumers buy. Your wages, truck, insurance and rent moved by their own amounts.

Put this year's real figures into the labor rate calculator: payroll register wages, workers' comp from your policy, last year's overhead, the truck and your measured billable efficiency. Then compare:

• Break-even rate: the price at which the shop covers its costs and makes nothing.
• Rate with profit: break-even divided by (1 − net profit %).
• Your current rate: what you actually charge per billable hour.

In the example shop the break-even is $112.68 and the rate at a 10% net profit is $125.20. Against a current $105.00, the gap is $20.20, or 19.24% ($125.20 ÷ $105.00 − 1). Every billable hour at $105.00 is $7.68 under cost.

Step 2: Check what the gap costs and what volume you can lose

The example shop's three techs bill 3 × 1,216.8 = 3,650.4 hours a year. Multiply by each rate and compare with the year's cost at break-even, $112.68 × 3,650.4 = $411,327.07.

The same table answers the question every owner asks: how many customers can I lose? Treat every cost as fixed for the year, which is the cautious way to run it because the techs are paid whether or not the hours are sold. Revenue at $125.20 equals today's $383,292.00 at 3,061.4 hours, so you could lose 589.0 hours, or 16.13%, and take in the same money. Against cost, $411,327.07 ÷ $125.20 is 3,285.4 hours; the shop can lose 365.0 hours, or 10.00%, before it is back at break-even. That 10% is simply the profit target.

At $115.00 the cushion is thin: $411,327.07 ÷ $115.00 is 3,576.8 hours, so losing 73.6 hours (2.02%) erases the profit. Losing the jobs priced too low to be worth doing is a different matter from losing good customers, and the table can't tell you which you will lose.

Waiting also has a price. If all 3,650.4 hours were still sold, the difference between $125.20 and $105.00 is $73,738.08 a year, or $6,144.84 for every month the old rate stays.

Step 3: One step or two

A single move to $125.20 is a 19.24% jump. Two steps is gentler: $105.00 to $115.00 is 9.52%, then $115.00 to $125.20 is 8.87%. The cost of staging is time at a rate that still earns almost nothing. At $115.00 the shop clears cost by only $2.32 an hour.

This is a judgment call, not a rule from a source. If you stage it, make the first step at least reach break-even, and set the date of the second step before you announce the first. Whichever you pick, schedule it for a fixed date, such as the first of a month, so the office and the techs quote the same number from that day on.

Raise the whole book together, not only the hourly line. If you price by the task, rebuild the entries with the new rate, as described in the flat-rate price book guide, instead of adding a percentage to each price. The markup vs margin guide covers the parts side.

Step 4: What to tell customers

The new rate applies to new work. Beyond that, the decisions are about fairness and paper:

1. Open quotes. Honor each written estimate until its expiry date, then requote. If your estimates don't carry an expiry date, add one now (how to write an estimate).
2. Repeat customers. Tell them before the invoice, in a sentence: the date, the new rate, and that costs have gone up. Avoid blaming a supplier or suggesting the old price was a favor.
3. Office script. Give the people who answer the phone one number and one sentence. A customer who asks why should hear the same answer from everyone.
4. Techs. Make sure they know the new rate too; they will be asked.

Keep the notice short and factual. Whether a price notice is required for your kind of work, and what it must say, depends on your state and on the contract; ask your state's consumer protection office or an attorney.

Step 5: Maintenance-plan members

Members bought a plan at a stated price for a stated term. Check your plan's terms; raising the price at renewal, not mid-term, is the simplest way to stay within what members agreed to.

The arithmetic follows the labor rate. A plan with one 1.5-hour inspection and $40.00 of supplies is priced at 1.5 × $105.00 + $40.00 = $197.50. At $115.00 it is $212.50, and at $125.20 it is $227.80, which is 15.34% above the old price. The HVAC agreement guide shows how a two-visit agreement is built and why member discounts come out of profit.

The legal side varies by state, and New York is only one example. New York's automatic-renewal law, for the offers it covers, requires a clear notice of a price increase at least 5 business days and no more than 30 days before it takes effect. Separately, a price higher than the one disclosed at sign-up cannot be charged without the customer's consent, or without letting the customer cancel for at least 14 days after the charge with a pro-rata refund (N.Y. Gen. Bus. Law § 527-a). It protects consumers, and its exemptions include some service-contract sellers, so whether it reaches your plan is a question for your attorney. Other states have their own renewal rules; ask your state attorney general's office.

When not to raise a price

State price-gouging laws can apply to repair work after a declared emergency, so check with your attorney general's office before a scheduled increase takes effect during one. New York's law covers emergency repairs during an abnormal market disruption that leads to a gubernatorial emergency declaration. It sets no number; a court looks for a gross disparity from the seller's usual pre-disruption price or from prices in the trade area, and a defense exists where an increase preserves the pre-disruption margin or passes on added costs outside the seller's control (N.Y. Gen. Bus. Law § 396-r). Florida's law, for its declared emergencies, covers essential commodities, defined to include goods and services, and rental housing. A price is prima facie unconscionable if it grossly exceeds the 30-day pre-declaration average, either the seller's own or the trade area's, unless it reflects added costs or market trends (Fla. Stat. § 501.160). Which services and time periods are covered differs from state to state.

Bottom line

Rerun the rate, size the gap in dollars, check the volume cushion, pick one date or two, and put it in writing for quotes and plan renewals. In the example shop, $105.00 an hour runs $28,035.07 a year below cost and $125.20 leaves $45,703.01 with room to lose a tenth of the hours. Start with the labor rate calculator and your own numbers.