14 signs you under-quote & what to do..
If you’re busy but never ahead, your pricing—not your workload—is likely the issue. Under-quoting quietly drains cash flow, increases stress, and locks you into working harder for less. But it’s not sustainable. Here are 14 signs you might be undercharging, and what to do…
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Sign 1 – You Haven’t Checked Your Pricing in the Last 30 days
The world has changed and geopolitical events mean builders need to stay in touch with price rises from suppliers and contractors. See why & how at Iran Oil Crisis: Cost Impacts for Builders
Sign 2 – You’re Booked Out More Than 6 Months in Advance
Occasionally a builder will tell us they’re booked ‘years in advance’. When we unpack their pricing, we typically discover the reason they’re booked so far in advance is because they’re under-charging. See how to manage this at How Far in Advance Should You Be Booked Out?
Sign 3 – Your Contract Template Doesn’t Cater for Cost Escalations
In times of volatility, including contract terms that allow cost escalations for significant or force majeure events such pandemics, wars or natural disasters will allow you to pass on cost escalations to clients.
Sign 4 – Your Subbies Chase You For Payment
More to the point, you don’t have the cash to pay them when their invoices fall due. If your cashflow’s a problem, act quickly to up your pricing avoid problems down the track.
Sign 5 – Your Automatic Response to Low Profits/Cashflow is to Work Harder
There’s nothing wrong with hard work, but working longer hours isn’t a sustainable way to protect your profitability. Eventually, you’ll burn out. Increasing your margins or lowering your costs protects your margins without you burning the candle at both ends. See what to do at Builders Roadmap to Increase Margins
Sign 6 – Recent Fuel Price Rises Make Your Business ‘Unsustainable’
Fuel prices have gone nuts recently but, in the scheme of things, fuel costs alone should never make a builder’s business unsustainable. If you’re feeling the pinch, up your margins.
Sign 7 – You Win Most of the Jobs You Quote
Like being booked out years in advance, winning most of the quotes you enter suggests you could increase your margin to work less for the same (or better) profits. See How Far in Advance Should You Be Booked Out?
Sign 8 – Variations Are The Only Way You Make Decent Money
If profit depends on variations instead of being built into the original quote, you’re undercharging upfront. We’ve seen some builders do this in a systemic way but they typically struggle to get referrals from clients who feel ‘pinched’ at the end of the job.
Sign 9 – You Feel Relief When a Client Rejects Your Quote
That’s your gut telling you the job wasn’t worth it financially. If you’re getting that feeling, re-assess your pricing. You can test your pricing against local builders with a free ProCalc trial
Sign 10 – You’re Dipping Into Personal Money or Juggling Cash Flow
If your business can’t stand on its own, margins are too thin. If you can’t increase your prices (see how at Builders Roadmap to Increase Margins) you’re better off working as an employee for someone.
Sign 11 – Every Job Feels Tight or Stressful Financially
You’re constantly thinking: “I hope nothing goes wrong on this one.”
That means there’s no buffer in your pricing and you’re being unfair to yourself. Ideally, factor in a contingency for things to go wrong – they always do!
Sign 12 – You Can’t Afford to Hire Properly
If bringing on a good supervisor or admin feels impossible, your pricing isn’t supporting growth.
Sign 13 – Your Marketing (or Lack of) Attracts Price-Sensitive Clients
Cheap pricing attracts clients who push, question, and squeeze you. Better-paying clients expect professionalism and are easier to work with. See 10 Questions Builders MUST Ask Prospects
Sign 14 – You Define Scaling as ‘More Jobs’
When you think about ‘scaling’ your business, do you automatically think more jobs, more utes, more employees?
Instead, try thinking ‘more profit’. Test every new initiative against the likelihood of it generating better profits. If it’s a safe bet, go for it. Don’t scale disfunction.
If you want to check your pricing, book a free price check
Drawing data from 10’s of thousands of home builds worth billions, ProCalc offer Australia’s most informed builders feasibility data. Pricing intelligence at your finger tips.
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- How (& Why) to Charge for First Client Meetings
- Take a Free Trial of ProCalc
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- Want more tips like these? Checkout the Webinar: Work Smarter, Not Harder
Richard Armstrong is a former registered builder who recently interviewed hundreds of experienced Australian builders to identify how they best manage clients, budgets and profitability.
