The annual review, in seven steps
The annual pricing day
- 01Pull last year's price list. List every offer you sold this year, with the price you charged.
- 02For each offer, run the cost recipe again. Costs may have moved. Note the new floor.
- 03Check the market range for each offer. Note the new ceiling.
- 04Look at how many of each you sold and at what margin. Identify the offers that are healthy and the ones that aren't.
- 05Decide on changes - prices to raise, offers to drop, packages to introduce. Aim for a small number of changes, not a wholesale rebuild.
- 06Update the price list. Announce any increases six to eight weeks in advance.
- 07Block the next annual review in the calendar.
A working day is enough. Some businesses split it across two half-days - one for the analysis, one for writing the announcement and updating materials. The point is that it happens once a year, on a known date, and produces a clear output.
The one-page pricing summary
- Date of the review.
- Each offer with its current price and one-line explanation.
- Any prices changing this year, with the new price and the date of change.
- Any offers being dropped, with the date.
- Any new offers being added, with launch date.
- The discount policy: when discounts are allowed and what they require (e.g. multi-job, upfront payment, repeat customer).
- The minimum job size or price floor.
- The next review date.
Stick it on the wall. Share it with anyone who quotes on behalf of the business. The page is the source of truth for the next twelve months.
Handling exceptions
Real life produces edge cases. A long-term customer asks for a one-off favour. A friend's friend wants help. A potential big-name client asks for a discount because the work would be a great reference.
Two rules keep the rhythm intact. First, exceptions are exceptions. They're handled case by case and don't change the published price. Second, every exception comes with a clear reason and a defined limit. "Yes, this is a discount on the standard price - because of the reference value, only for this one project, full price for any future work." Without the limit, the exception becomes the new normal within months.
Communicating the rhythm
Tell customers about the annual review. Put a small line on the website or in the introduction email: "We review prices once a year, in January. Customers get six weeks of notice before any change." That single sentence does two useful things. It signals that you're a professional business that takes pricing seriously. It also pre-empts the surprise when the increase email arrives.
Most customers respond positively to that line. It tells them they won't be ambushed. It also tells them you're not negotiating prices in real time, which makes the early-stage conversations easier.
What changes after a few rounds
By the third annual review, pricing stops being stressful. The exercise is familiar. The decisions are smaller because most of the heavy correction happened in year one. The customers who don't fit have already moved on. The customers who stay are the ones who pay willingly. The business runs at a healthier margin, which means more time to invest in service, training and growth.
Pricing well isn't a one-off achievement. It's a quiet yearly discipline that compounds. Most small businesses that do this for five years end up with margins twenty to forty per cent higher than competitors who don't, with no other change required.
Closing
Pricing is not the most exciting subject in this series. It is one of the most consequential. The owners who treat it as a yearly conversation with themselves - calm, structured, evidence-based - end up with stronger businesses than the owners who treat it as a once-in-a-blue-moon agonising decision.
Review results and improve the system. The yearly review is exactly that. Pick a date, run it once, and the second time will be easier than the first.
What to do this week
Block one working day in the calendar for your first annual pricing review. Pick a date in the next eight weeks. Tell whoever else needs to be involved. The hardest part is the calendar entry - everything after that is just doing the work.
Build trust before asking for action. Pricing well is a trust signal. The next book in this category, 'Packaging Products and Services', takes the prices you've set and helps you wrap them in offers customers can choose between with confidence.
