Lesson 1
Cost, Markup, and Margin, Untangled
Three numbers, one common mix-up. Cost is what the job takes to deliver. Markup is profit as a percentage of that cost. Margin is profit as a percentage of the price you actually charge — and it's usually the more useful number to run a business on.
A quick way to check: a 50% markup on a $1,000 job prices it at $1,500 — but that's only a 33% margin, not 50%. The two numbers diverge more as the percentage grows, which is exactly why this mix-up quietly costs the most on the biggest jobs.
Decide up front which one you're targeting, and use a calculator for the conversion rather than doing it in your head between jobs.
Lesson 2
Handling "That's Too Expensive"
The instinct when a client pushes back on price is to discount. Before doing that, it's worth figuring out what kind of pushback it actually is — a value objection and a budget objection need different responses.
"Too expensive" often really means "I don't yet understand why it costs this" — in which case walking through the scope again, not the price, is what actually resolves it. If it's a genuine budget constraint, offering a reduced scope at a lower price protects your margin better than discounting the same scope.
A discount trains a client to expect one next time. A scope adjustment doesn't.
Lesson 3
When (and How) to Raise Your Prices
If you're consistently the cheapest bid and still fully booked, that's not a coincidence — it's a signal you're underpriced for the demand you actually have.
New clients are the easiest place to start: raise the price on quotes going out this week, and there's no existing relationship to manage. For existing clients, give real notice — thirty days is reasonable — and a brief, honest reason (material costs, insurance, whatever's true) rather than no explanation at all.
A price increase that loses a few of your least profitable clients while the rest stay is usually a net win, not a failure.