How to Avoid Making a Loss on Maintenance Contracts

Understand Your True Costs

One of the biggest mistakes we see in the industry is contractors pricing based on what they think a job should cost, rather than what it actually costs. Labour, fuel, machinery maintenance, insurance, waste disposal, and compliance all add up. Without fully factoring in these overheads, companies risk taking on contracts that drain resources instead of building a stable business.

A practical approach is to break each job down into:

• Direct labour costs (wages, pension, National Insurance).
• Operational costs (fuel, equipment servicing, consumables).
• Overheads (admin, vehicles, insurance, office space).

Once the full picture is clear, it’s easier to set rates that reflect reality rather than guesswork.

Resist the Race to the Bottom

It’s natural to want to win contracts, especially when competing against larger firms. But underbidding simply to get your foot in the door can cause long-term damage. A contract that doesn’t pay its way will affect cash flow, morale, and the ability to reinvest in equipment and staff.

Instead, focus on communicating value: highlight reliability, quality of work, compliance, and customer service. Many clients will pay more for peace of mind, particularly in sectors like education, commercial property, and local authorities where reputational risk matters.

Build Contingencies into Your Pricing

Grounds maintenance is full of variables – weather, site access, client requests, or unexpected repairs. If pricing leaves no room for contingency, these factors can quickly turn a profitable contract into a loss-making one. Adding a realistic buffer into tenders can protect your margins without making your quote uncompetitive.

Review and Adapt Regularly

Markets shift, costs rise, and what worked two years ago may no longer be viable. Regularly reviewing contracts ensures you’re not locked into agreements that no longer make financial sense. Building in annual review clauses and being transparent with clients about rising costs helps create sustainable relationships.

Think Long Term

Ultimately, profitability is about sustainability. At Majestic Grounds Maintenance, we focus on building partnerships with clients rather than chasing short-term wins. By pricing fairly, delivering consistently, and reinvesting in staff and equipment, we’ve been able to grow steadily without sacrificing standards.

Winning contracts is important, but profitability keeps your business alive. Know your costs, resist underbidding, price for contingencies, and review regularly – your bottom line depends on it.

Majestic Grounds Maintenance provides commercial and residential grounds and garden maintenance across East Anglia, the East of England and North London, backed by 30 years of experience and industry accreditations.