How to Improve Profitability and Grow Your Service Business

1. Attract new leads

Bringing in new leads typically results in more contracts, which means more jobs on the schedule and more money in your pocket. But customer acquisition is easier said than done.

Depending on how you generate leads already, you may want to try: 

• Building a website with online booking to help customers find you and easily set up an appointment
• Using lead generation tools like Thumbtack or Angi to boost your online presence and reach a new audience
• Creating and optimizing a Google Business Profile so you can appear in search results in your city or town when people search for services like yours
• Use Google Ads like Local Services Ads to increase your reach and be visible to more people online
• Starting a social media business page on Facebook, Instagram, or Nextdoor to showcase your service and engage with potential customers
• Asking for referrals from happy customers 
• Joining local directories like Yelp and the Yellow Pages
• Trying new marketing efforts like email campaigns, new customer pricing, and seasonal promotions

The method you use will depend on your budget and what you already have in place. 

For example, joining local directories or making business pages on social media is typically free and only takes a few minutes. On the other hand, using lead generation platforms usually costs anywhere from $5 to $100+ per lead, based on your services, location, and competition.

2. Try different pricing strategies

When you set your service pricing, you probably started with a straightforward pricing strategy that reflected each service, its associated costs, and a reasonable profit margin. 

But as your business grows, exploring different pricing strategies can be an effective way to serve more clients and increasing profitability. 

You can experiment with: 

• Good, better, best pricing shows clients basic, standard, and premium pricing options for the services they requested. For example, mowing, mowing with trimming, and mowing with trimming and a fertilizer application. That way, they can choose the option that best suits their budget and needs, potentially increasing the value of the job. 
• Discount pricing offers reduced pricing based on special circumstances like promotions, seasonality, loyalty, and recurring services. For example, giving new customers a 10% sign-up discount when they sign up for weekly cleaning.
• Price bundling combines services that pair well together to offer a single package at a reduced rate. For example, bundling deck, siding, and driveway pressure washing together at a lower price than what a client would pay to purchase them each separately.

These methods can attract new customers, increase the overall value of each job, and encourage recurring work, positively impacting cash flow and revenue.

Just make sure to factor in your desired profit margin and markup before setting discounted prices to ensure you still turn a profit.

3. Use job costing

Job costing is when you review a completed job to determine how much money you made after costs, including labor, materials, and overhead expenses. It’s one of the best ways to evaluate your current pricing to see whether you’re making as much profit as you’d like. 

You can either cost jobs manually by adding up the total costs associated with a job and comparing them to the amount you charged the client or use job costing software like Jobber. 

Jobber will automatically calculate how much you made on a job, showing you whether you covered your expenses and what your profit margin was. Then, you can use the information to increase pricing or experiment with new strategies to make it easier to grow.

4. Learn how to sell

Selling may not be your favorite part of the job, but if you don’t work to close deals, it’ll be hard to improve profitability. 

Sales techniques don’t have to be uncomfortable or focused on making a hard sell. Instead, you can focus on methods like: 

• Building trust with clients by being on time and responding to their messages quickly
• Connecting with potential clients by making an effort to understand their problems
• Creating professional quotes and estimates
• Using field service management software to enhance customer experience
• Having social proof like reviews and before-and-after images to show customers what they can expect from working with you

The more sales volume you have, the more clients you’ll book, providing you with the extra funds you need to expand. 

Upsell your services

Upselling increases the value of your invoices by encouraging customers to purchase additional services. They’re higher price add-ons that offer the customer a more comprehensive service while increasing the profit you make. 

For example, if a customer reaches out to purchase sod from your landscaping company, you could upsell installation to them by highlighting the benefits compared to the costs. Such as soil preparation, placement, and long-term lawn health for only a small amount more. 

However, it’s important that your upsells make sense, are within the client’s budget, and offer value. Otherwise, clients won’t be interested in them. 

READ MORE: Upselling tips from home service pros

5. Get repeat business

Repeat business means recurring revenue. The more repeat customers you have, the more reliable and predictable your cash flow. 

To encourage people to book ongoing service with you: 

• Offer services that people need regularly, like seasonal snow removal, biweekly house cleaning, HVAC maintenance, lawn care, dog walking, or pool cleaning
• Provide loyalty incentives, like small discounts when customers book recurring work
• Make your business easy to work with through online booking, payment processing, and a self-serve portal customers can use to help themselves 
• Prioritize customer service to make a good impression and set yourself apart from the competition

If you can’t or don’t offer recurring services, you can still benefit from having repeat customers. 

For example, a handyman might not be able to offer regular, ongoing services, but they could still aim to be a customer’s go-to service provider by providing excellent service, doing high-quality work, and communicating about what they offer.

6. Ask for referrals

Referrals from happy customers are one of the best ways to improve profitability through new leads. They’re low-cost, add to your business’s reputation, and usually result in profitable customers because they come with a trusted recommendation. 

Just asking for referrals isn’t enough, though. To set yourself up for success, build a customer referral program that actively runs in the background to leverage satisfied customers and bring in new work using referral software like Jobber. 

It can help you create an impactful referral program, promote it to happy customers, and track its success, freeing you up to focus on more important tasks.

READ MORE: Winning customer referral program ideas

7. Try email marketing

Email marketing campaigns keep current customers informed, engage past clients, and encourage leads to book a service. 

You can use them to tell the people on your email list about: 

• Promotions and discounts
• New services or service areas
• Referral programs
• Your social media pages

Emails also give you a way to ask for reviews, offer educational content like maintenance tips, and stay top of mind with clients. 

Then, when they need work done, they’ll remember you and book a service.

8. Expand your services or location

Another way to improve profitability is to add to your service list or expand your service area. This opens your business up to more customers with different needs and can help set you apart from competitors. 

For example, a cleaning business could offer commercial cleaning or post-construction packages. Or a landscaping business could add tree pruning to their services. 

And if you can easily service a new area without significantly increasing costs, it can open your business up to a whole new customer base. Like a community of newly built homes in the suburbs. 

9. Train staff 

When you invest in your staff members by training them to be more efficient, complete high-quality work, and prioritize customer satisfaction, you make more profit. Jobs take less time, and customers are more likely to book your services again and refer you to their connections. 

Create standard operating procedures for staff to follow, offer opportunities for them to learn new skills, and ask for their input on how to improve productivity. 

This approach benefits your business and customers, all while boosting morale and engagement, keeping everyone happy.  

10. Cutting costs

Cost management is important for overall profitability, and cutting unnecessary expenses is one of the fastest ways to increase profit as a business owner.

If you can reduce your operational costs without sacrificing quality or customer service, you’ll free up more cash to reinvest in your business or grow your bottom line.

Look for cost reduction in these areas:

• Review your software tools. Look at all the apps and software you’re paying for and cancel anything you don’t use. Or you could look for opportunities to switch to an all-in-one platform to replace multiple tools and save money each month.
• Rethink your office space. If you rent an office or shop, ask yourself if you need all that space. Some businesses cut costs by downsizing or going remote. Working from home or in a smaller space will lower your rent and utility bills.
• Negotiate with your suppliers. Don’t be afraid to ask suppliers for better pricing, especially if you’ve been working with them for a while. They might offer you a discount or better terms to keep your business.
• Save on energy costs. Switching to energy-efficient lights or appliances might seem small, but it adds up. Lowering your power bill each month puts more money back in your pocket.
• Outsource tasks when it makes sense. Hiring full-time staff for every role can be expensive. Instead, consider outsourcing bookkeeping or hiring subcontractors or part-time workers. It can be more affordable and just as effective.

Look for ways to trim your expenses regularly. Even small savings can make a big difference to your long term success.

READ MORE: A complete guide to overhead costs

11. Track profit

If you aren’t tracking profit, you won’t know how to improve it. Regularly reviewing revenue, expenses, margins, and gross and net profit helps you identify inefficiencies, spot trends, and make informed decisions for profitable growth. 

By understanding where your money is coming from and where it’s going, you can make adjustments to pricing, cut down on costs, and focus on the most profitable services. 

Reporting software like Jobber can help you monitor costs, income, and profit so you can stay on top of your finances and choose the right strategies for improving profitability. 

READ MORE: Expert financial tips for business success

Free profit forecast tool

Use this free profit forecasting tool to measure your business’s current profit and see which areas will have the greatest impact on your bottom line.