Pricing for Profit: How to Price Your Services in Canada (Without Being Busy and Broke)
If you’re booked, busy, and still not seeing enough money left over… your pricing might be the problem.
And no — this isn’t about charging “luxury prices” or copying what competitors do. It’s about building a price that covers your real costs, protects your capacity, and leaves room for profit and taxes.
This guide is a simple way to think about how to price services in Canada so your business can actually support your life.
Why “what competitors charge” is a trap
Competitors don’t have your exact:
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overhead costs
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delivery time
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client demands
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team (or lack of one)
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goals (like paying yourself consistently)
Most banks and Canadian small-business resources recommend starting with cost awareness and a clear pricing approach (cost-plus, value-based, etc.) rather than guessing.
So instead of “What do others charge?” ask:
“What do I need to charge for this to be sustainable?”
Step 1: Calculate your true costs (not just the obvious ones)
A solid pricing strategy starts with knowing your costs — direct costs and the hidden ones.
Direct costs (easy to spot)
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subcontractors
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software used specifically for the client
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materials (if applicable)
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transaction fees
Overhead (the silent profit killer)
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general software subscriptions
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insurance
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bookkeeping/accounting
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marketing tools
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admin support
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home office / rent portion
If you miss overhead, you might “make sales” but still feel broke.
Step 2: Price for capacity (your time is a limit)
Service businesses aren’t unlimited. Your time, energy, and calendar are real constraints.
So you need to account for:
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delivery time (client work)
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admin time (emails, calls, revisions)
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sales time (calls, follow-ups, proposals)
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recovery time (because you’re a human)
A lot of service pricing guidance recommends building your price from expenses + desired profit margin (and then checking market reality)
Step 3: Add profit margin on purpose
Profit is not “whatever is left.” It’s what lets you:
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build a buffer
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invest in help or systems
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survive slower months
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actually grow and most importantly
- pay yourself!
A common way to think about margins is profit ÷ revenue × 100 (and you can apply this thinking whether you’re looking at gross or net).
You don’t need a perfect percentage today — you need a decision that profit is included, not optional.
Step 4: Don’t forget taxes (this is where many Canadians get burned)
Here’s the blunt truth: if your pricing doesn’t account for taxes, you’ll feel like you’re doing well… until you’re not.
Canadian banks and business advisors often warn that not setting aside money for taxes can create cash-flow issues at tax time.
This isn’t tax advice — it’s a pricing reality:
If your price doesn’t leave room to set aside for taxes, the business will always feel tight.
A simple pricing formula (service business friendly)
There are different pricing strategies (cost-plus, competitor-based, value-based, tiered), but cost-plus is often a practical “price floor” starting point for small businesses.
Try this as a baseline:
Price = (Direct Costs + Allocated Overhead + Time Cost) + Profit + Tax Cushion
Then sanity-check it:
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Does the market support this?
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Can you package or tier your offer to make it easier to buy?
Quick signs you’re underpricing
If any of these are true, your pricing needs attention:
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You’re always “catching up” even after a good month
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You dread client requests because you’re overdelivering
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You can’t pay yourself consistently
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You avoid raising prices because you’re scared clients will leave
Underpricing doesn’t just reduce profit — it increases burnout.
What to do this week (simple action step)
Pick one offer (your most common service) and answer:
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What does it truly cost me (including overhead + time)?
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What profit do I want this offer to create?
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Does the current price allow room for taxes and owner pay?
Even doing this once usually creates an “aha” moment.
FAQ
How do I price my services in Canada?
Start with direct costs + overhead + time, then add profit and room for taxes. Use cost-plus as a floor and refine based on value and market.
What pricing strategy is best for small businesses?
Cost-plus is a simple baseline; value-based and tiered pricing can increase profit when positioned clearly.
How do I calculate profit margin for pricing?
A common approach is profit ÷ revenue × 100 (used across margin types like gross/net).
Should I include taxes in my pricing?
You should ensure your pricing leaves room to set aside for taxes to avoid cash-flow pressure later.
This article provides general information and education only. It is not accounting, tax, legal, or investment advice. Any strategies mentioned may not be suitable for your situation. For guidance specific to you or your business, please consult a CPA and/or licensed financial advisor.
