Pricing is the lever most small businesses pull last and worst. This eBook gives you a calm, structured way to think about it - not a single magic formula, but a method for picking the right model, setting a defensible number and raising prices when the time comes.
Members ebook·7 chapters· 35 minute read
Chapter 5
When to Raise Prices
When and how to raise prices without losing the customers you want to keep.
Almost every small business needs to raise prices more often than it does. Costs drift up. Skills improve. The market moves. The price set three years ago becomes a quiet drag on margin. And yet most owners go years without an increase because the conversation feels confrontational and they fear losing customers.
The good news is that price increases are almost always less painful than expected. Existing customers are mostly understanding, especially if they hear about it in advance with a clear reason. New customers don't notice - they're meeting your price for the first time, and ten per cent higher is just the price.
This chapter is about when to raise prices, how much to raise them by and how to handle the conversation. By the end you'll have a script you can use this month and a rhythm for keeping prices in step with reality from now on.
The full chapter covers the four right moments for an increase, the typical size, the script for telling existing customers and how to handle the small number who push back.
The four right moments
There are four moments when a price increase is easy to justify. Annual review - many businesses do a small increase every January. Cost shock - when something significant has changed in your supply chain or cost base. Capacity shift - when you're booked out and demand keeps coming. Offer change - when you've added something genuinely new to what you provide.
Most small businesses should be doing a small annual increase as a matter of course. Five to ten per cent a year keeps you in step with cost inflation without feeling dramatic to anyone. The annual increase is also the moment to do any larger correction if you're significantly underpriced.
How much to raise
For an annual increase, five to ten per cent is the easy range. Customers barely notice. For a larger correction - if you've discovered you've been thirty or forty per cent under market - twenty to thirty per cent in one go is usually safe if handled properly. Above that, consider doing it in two stages over six or twelve months.
The exception is when you've made a substantial change to the offer. Adding a guarantee, expanding the scope, upgrading the materials or improving the service quality all justify larger jumps. The customer is buying something different now, not just paying more for the same thing.
Signs your prices are too low
You're booked out for weeks or months.
Your customers tell you you're "a bargain" or "too cheap".
You're working long hours and feel tired but not well-paid.
You haven't raised prices in two or more years.
Your prices are noticeably lower than competitors who do similar work.
Telling existing customers
Two principles. Tell them in advance. Tell them simply.
Six to eight weeks of notice is the standard. The script is short. "Hi - just a heads-up that our prices are going up by ten per cent from the first of October. Costs have moved over the last couple of years and we want to keep delivering the same quality of service. The new rate will be £x. Anything booked before October 1st is at the current rate. Let me know if you have any questions."
That's it. No long apology. No paragraph of justification. The clearer the message, the calmer the response.
Handling pushback
About one in ten customers will push back. Most will accept your explanation. A small number will leave. Don't drop the price for the ones who push - it makes the policy look arbitrary and trains the customer to keep negotiating.
If you want to soften the impact for valued long-term customers, hold them at the current price for one more cycle, with the increase at their next renewal. That's a one-off concession, framed as a thank-you for the long relationship, not a discount you'll repeat.
What to do when someone leaves
Some customers will leave. Look at who they are. In most price-increase rounds, the ones who leave are the same ones who were always slightly below the margin you wanted - the difficult ones, the slow payers, the demanding-for-the-money ones. Their departure usually frees up room for higher-paying customers and lower-stress work.
If your best customers - the ones who pay willingly and treat you well - leave at the increase, you've gone too far or done it badly. That's vanishingly rare in practice. If it happens, dial back the next increase and review what went wrong.
Building the annual rhythm
Pick a date. The first of January, the first of April, the start of your financial year - whatever fits. Every year on that date, review prices, decide on the increase and announce it six to eight weeks ahead. The first time is the hardest. The third time it's part of the rhythm of running the business.
What to do this week
Decide your next price increase date. Decide the amount. Draft the email or letter. Schedule the announcement. The whole exercise takes an hour. The payoff is twelve months of higher revenue at no extra cost.
Keep existing customers close. The way you handle the price-increase conversation is one of the strongest signals customers get about how you treat them. The next chapter is about the deeper trap that catches a lot of small businesses - the cheapness trap.
The rest of this chapter walks through the practical steps, the templates and the checklists you need to put it into action. It includes worked examples, copy frameworks and the small decisions that make the difference between a plan that sits in a drive and one that gets used.
Inside you'll find a step-by-step playbook, a downloadable template, a checklist you can run this week and a short list of common mistakes to avoid before you start.
The full action plan, broken into weekly steps.
Ready-to-use scripts, templates and checklists.
Worked examples for different sized businesses.
Common mistakes and how to avoid them.
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