The Hidden Cost of Competing on Price: Advice for Growing Trades Businesses

In the trades sector, pricing is often the battleground where businesses compete for work. It’s tempting to think that offering the lowest quote will secure the job and keep the team busy. But here is the truth: the work you win on price is the work you will lose on price. Because anyone can sell a dollar for fifty cents.

I have coached hundreds of trade businesses across Australia, including builders, plumbers, electricians, landscapers, HVAC specialists, solar installers, carpenters, concreters, and commercial painters. I have seen firsthand what happens when pricing turns into a race to the bottom. The result is not pretty. Margins shrink, stress levels increase, and the business ends up working harder for less profit.

Meet Ashley Thomson: Your Tradie Business Coach

I am Ashley Thomson, a tradie business coach at Tenfold Business Coaching. With more than 20 years of experience coaching established businesses in the construction and trades sectors, I have helped owner-operators grow their businesses from earning $500,000 to becoming multi-million-dollar operations. My background in engineering and corporate consulting has taught me how to build businesses from first principles, focusing on clear and practical strategies without any unnecessary fluff.

I have purchased, operated, and sold my own business, so I understand the pressures involved in managing payroll, quoting, and keeping the business running smoothly. I also know what it takes to lead a team, manage cash flow effectively, and ensure sustainable growth. That is why I am sharing this insight with you because I want your business to thrive and succeed, not just to survive.

Why Competing Soley on Price Hurts Your Trade Business

Let’s be clear: price matters, but it shouldn’t be your only lever. When you compete solely on price, you’re telling your market that your value is interchangeable. This approach is risky, especially in trades where the qualities of durability, reliability, and professionalism are crucial differences that set you apart.

Here’s what happens when price becomes your main strategy:

You attract price-sensitive clients who will leave as soon as someone undercuts you.

You erode your margins, which means less profit to reinvest in your team, tools, and systems.

You create a culture of discounting, which undermines your brand and your confidence.

You end up working longer hours for lower returns, which leads to burnout and stagnation.

Know Your Numbers

As a tradie business coach, one of the first things I do with clients is to dive into their financials. Not just revenue, but also gross profit, net profit, cost of goods sold, overheads, and chargeable rates. Because if you don’t understand your numbers, you’re essentially flying blind.

Let’s say you provide a quote for a job at ten thousand dollars. If your cost of materials and labour comes to eight thousand five hundred dollars, your gross profit is one thousand five hundred dollars. But if you decide to lower your quote to nine thousand dollars to win the work, your profit drops to five hundred dollars. That’s a sixty-six per cent reduction in profit for a ten per cent discount. Is it worth it?

Trade business coaching helps you grasp the ripple effect of pricing decisions. We develop financial models that demonstrate how changes in price, volume, and efficiency can impact your bottom line. This way, you can confidently provide quotes and safeguard your profit margins.

Positioning Over Pricing

Instead of competing on price, position your business as offering the best value. This involves clearly explaining what sets you apart and why clients should choose your services, even if you are not the cheapest option available.

Are you recognised for turning up on time? Do you communicate clearly and professionally? Do you deliver high-quality work that endures? These are the qualities that matter to clients who seek peace of mind, not just a cheap deal.

In tradie business coaching, we help you define your unique value proposition and communicate it effectively to your potential clients. This might include improving your website, refining your quoting process, or providing training to your team so they can deliver a consistent and high-quality experience to your clients. The goal is to build trust and establish credibility so that clients see you as a true professional, rather than just a tradie.

Tiered Pricing

One practical approach we utilise in trade business coaching is tiered pricing. Instead of providing a single quote, offer options such as basic, standard and premium. This gives clients a choice and helps you establish a clear value proposition.

For example, a landscaper might offer:

Basic: turf installation only

Standard: turf plus garden beds and edging

Premium: full landscaping with irrigation, lighting, and design consultation

This strategy shifts the conversation from asking, ‘How cheaply can you do it?” to focusing on, ‘Which option suits me best?” It also enables you to upsell without applying pressure and to increase the average value of each job.

Build a Reputation, Not a Discount Habit

Your reputation is your most valuable asset. If you are known for quality, reliability and professionalism, clients will be willing to pay a fair price. However, if you are known for being cheap, you will always be under pressure to cut corners.

At Tenfold Coaching, we work with tradie businesses across Australia to develop strong, reputable brands that attract their ideal clients. This process includes refining your messaging to clearly communicate your value, showcasing your work through various channels, collecting testimonials from satisfied customers, and leveraging word-of-mouth referrals. In the Australian trades industry, reputation is everything and it travels fast.

Invest in Efficiency

If you want to stay competitive without resorting to slashing prices, consider investing in efficiency. This involves streamlining your operations, improving scheduling, reducing wastage, and training your team to work smarter. By making these adjustments, you can maintain your market position and ensure sustainability in the Australian business environment.

We utilise tools such as job profitability trackers, chargeable rate calculators and pipeline forecasts to identify where your profit might be leaking. Afterwards, we implement systems to address these gaps and enhance your productivity.

Efficiency enables you to deliver more value without having to increase your costs. This is a key way to stay competitive in the market and maintain your profitability. In Australia, businesses often focus on improving efficiency to keep pace with industry standards and customer expectations, all while managing expenses carefully.

Business Coaching for Tradies: The Long Game

Growing a trade business in Australia is not about winning every single job. It’s about winning the right jobs; those that pay well, match your strengths, and help build your reputation. That requires strategy, not just hustle.

As your tradie business coach, I’ll help you focus on the long-term. We’ll set clear goals, monitor progress, and make decisions based on data. Together, we’ll build a business that works for you, not just one that keeps you constantly busy.

Because at the end of the day, you didn’t start your business to be the cheapest option. You started it to be the best.