Back to Blog

The "invisible" $5,000: How small "freebies" are killing your profit margins

· 3 min read
The "invisible" $5,000: How small "freebies" are killing your profit margins

If I asked you how much money you lost last year, you'd probably look at your unpaid invoices and say, "Maybe $500."

You'd be wrong. You likely lost closer to $5,000.

You didn't lose it because a client refused to pay. You lost it because you never asked for it.

In the trades, we call this "Profit Leakage." It's the silent killer of small service businesses. It comes from the small materials you forget to log, the "quick favors" you don't time, and the receipts that get lost under the seat of your truck.

Here is where your money is going, and how to stop the leak.

1. The "one connector" fallacy

You're wrapping up a networking job. You realize you need two extra RJ45 jacks and a faceplate. You grab them from the truck, install them, and finish the job.

When you write the invoice later that night, you think: "Eh, it's just $8 worth of parts. I'm not going to re-calculate the total for that. I'll just let it slide."

The math:
If you let $10 "slide" three times a week, that is $1,560 a year given away in free materials.
If you apply a standard 30% markup to those parts, you actually lost $2,000+ in revenue.

The fix: You are not a charity. If Home Depot doesn't give you the parts for free, you shouldn't give them to your client for free. You need a system that makes adding a $5 part to an invoice as fast as grabbing the part itself.

2. The "15-minute" favor

You finish the main repair. The client asks, "Hey, can you just take a quick look at the thermostat while you're here?"

You look. You fix it. It takes 15 minutes. You don't bill for it because "billing for a quarter-hour feels petty."

The math:
If your rate is $100/hour, that 15 minutes is worth $25.
Do that twice a week? That is $2,600 a year of free labor.

The fix: Clients actually respect detailed billing. Seeing a line item for "Thermostat adjustment (0.25 hrs) - $25" shows them you are meticulous and professional. It signals that your time has value.

3. The "lost receipt" black hole

You stop at the supply house for a specific bracket. You pay cash or use the company card. You shove the receipt in your pocket. It goes through the washing machine.

Come tax time, that expense is gone. You can't deduct it, and you certainly didn't bill the client for it because you forgot the exact cost.

The fix: Point-of-Sale Documentation.
You need to capture the expense the second it happens. Not at the end of the day. Not at the end of the week. Now.

Stop relying on memory

The human brain is terrible at remembering small numbers while focused on complex manual labor. If you rely on your memory to write invoices, you will always under-charge.

This is why "Real-Time Invoicing" is the secret weapon of high-margin contractors.

Using a tool like SiteSignOff, you can add a line item in 10 seconds:

  1. Pull out phone.

  2. Tap "Add Item."

  3. Type "2x Faceplates."

  4. Phone back in pocket.

By the time you get to the invoicing stage, those "invisible" costs are already locked in. The app remembers what you forgot.

Summary: You work too hard to give away $5,000 a year in "nice guy taxes." Tighten your workflow, capture every bolt and minute, and give yourself a raise this year.