Watch the full June Core KPI webinar on rate increase per year.
If you haven't raised prices in over a year, you're quietly losing ground every month — labor, supplies, and overhead all climb whether your rates do or not. Rate increase per year is the last of the six "green" KPIs (the ones you want to go up), and it carries more profit leverage than almost any other number you track.
What the number should look like
Your rate increase per year is the incremental percentage you raise rates to cover rising costs while staying competitive and sustainable. The healthy range runs 3% to 5% annually, and a steady 5% is more than enough to keep pace with most cost pressures. Skipping it entirely is the real risk: new owners who've never run an increase are usually the ones squeezed hardest on margin.
Why 1% on price beats almost everything else
Here's the math that makes this KPI worth your attention. Take a company earning 10% net profit — $1 in revenue, 90 cents in expenses, 10 cents in profit. Raise prices 1% and revenue ticks up a penny, but expenses don't move, because you're charging more for the same work, not doing more of it. That penny falls straight to profit — a 10% profit improvement from a 1% price bump. A 10% increase, in the same model, doubles your profit outright.
That's the through-line behind a phrase MaidCentral's leadership likes to repeat: revenue is for vanity, profit is for sanity. A $2M company running on a razor-thin margin is just scrambling — the great service, good jobs, and stable business all get funded from the profit line, not the revenue line.
Find the clients dragging your average down
The "cut off the bottom" exercise turns that leverage into action. Pull your average hourly rate per job, line every client up from lowest to highest, and look at who sits well below the pack. In one illustrative example, raising the below-average jobs up to a $65.57 average lifted the new average to about $72.49 — roughly $6.92 more per hour, and a 105% jump in profit on those jobs.
Raise rates without the headache
A few levers keep increases smooth for the customer — the stakeholder most likely to feel an increase as a loss:
- Roll them out monthly, not all at once. Increase everyone who hasn't had a bump in a year, a batch each month. You spread out any attrition instead of triggering a mass exodus.
- Add value, don't just add cost. Seasonal deep-clean packages, add-on services, and upcharges (admin, travel, preferred times or techs) raise the effective rate with little added expense.
- Protect quality and communicate. Scorecards justify the increase; advance notice with a clear reason keeps trust intact. A poorly explained increase damages the relationship; a transparent one can strengthen it.
And drop the self-limiting beliefs: you don't need to be the cheapest, you don't need every prospect to like you, and "buyers are liars" — what a customer says they'll pay isn't what they're willing to pay.
The Monday takeaway
Pull your rate increase per year and check it against the 3–5% target. Then run "cut off the bottom" on your client list, pick the most underpriced jobs, and start a rolling monthly increase. Be reassuringly expensive, not suspiciously cheap — small increases produce surprisingly big results.
FAQs
A: Aim for a 3% to 5% annual increase. A steady 5% is more than enough to keep pace with rising labor, supply, and overhead costs while staying competitive. The bigger mistake is skipping increases entirely, which slowly erodes your margin year after year.
A: Yes — far more than most owners expect. For a company earning 10% net profit, a 1% price increase produces roughly a 10% profit improvement, because your expenses don't change when you charge more for the same work. A 10% increase, in that same scenario, can double your profit.
A: It's a pricing exercise where you list every client's average hourly rate from lowest to highest, then raise the below-average jobs up toward your average. In one illustrative example, doing this lifted the average from $65.57 to about $72.49 per hour and increased profit on those jobs by 105%. It quickly surfaces who's most underpriced.
A: Roll increases out monthly to whoever hasn't had one in a year, rather than hitting everyone at once, so you spread out any attrition. Pair the increase with clear, advance communication explaining the reason, and keep quality visible through tools like scorecards. A well-communicated increase can actually strengthen the customer relationship.
A: Give advance notice with a clear, specific reason for the adjustment — rising costs, wage increases for technicians, or sustained service quality. Transparency builds trust and reframes the increase as fair rather than arbitrary. A poorly explained increase is what damages relationships, not the increase itself.
A: Generally no — never price match an inferior service. A cheaper competitor's products, training, and quality don't compare, so their price shouldn't set yours. Being "conspicuously cheap" can actually signal lower quality to customers; aim to be reassuringly priced for the value you deliver.
A: Add value-driven upcharges and services rather than only raising the base rate. Common options include admin or credit card fees, travel fees, preferred-time or preferred-technician charges (often $10–$20), and seasonal deep-clean or add-on packages. One company added a health-and-safety fee that funded technician healthcare, which customers received well.
