How to raise prices without losing customers. Ando Chong on the fear, the simple maths that says otherwise, and a clean way to lift prices with confidence.
Ask a room of small business owners when they last raised their prices and watch the eyes drop. Three years ago. Five. One bloke told me he had not touched his rates since before COVID, while his wages, rent, insurance and materials climbed every single year. He was not running a business anymore. He was running a charity for his customers, funded by his own family.
The fear is always the same. If I put my prices up, they will leave. So let us talk about how to raise prices without losing customers, and let us start with the maths, because the maths is kinder than your fear.
Say you run a 30 percent gross margin and you lift prices by 10 percent. That entire increase drops to your bottom line, assuming your cost to deliver the job has not moved. You could lose roughly a quarter of your volume and still make the same money, with less work, less wear on your team and less strain on you. Almost nobody loses a quarter of their customers over 10 percent. Most owners who finally move report losing almost nobody.
And look closely at who does leave. It is nearly always the customers who beat you down on every job, pay late and burn your team's hours. Losing them is not a cost of raising prices. It is one of the benefits.
Because you are pricing from your own wallet. Owners look at their price list and think, I would not pay that. But you are not your customer. You know what the job costs to deliver. They know what it is worth to have their problem solved by someone they trust.
Underpricing is the owner underpaying themselves at scale. It is the same instinct that has you drawing the smallest wage in the building, applied to every invoice you send. And most home stress is money stress, so that discount you keep giving the market comes out of your kitchen table.
Cleanly and confidently. Set the new price from your numbers, cost, margin and the value you deliver, not from what feels safe. Give existing customers notice with a short, plain message. From the first of next month our rates change to X. No apology, no three paragraph justification. Apologising for your price teaches customers the price is negotiable.
New customers just get the new price. No announcement needed.
Then hold your nerve for thirty days. A few customers will test you. One might leave. Your team will look at you to see whether you fold. Do not fold. The discomfort of one awkward month buys you margin for years.
If the value case feels thin, fix that first. Tighten what you deliver, sharpen the experience, then price it properly. But in my experience mentoring owners, the value is nearly always already there. It is the confidence that is missing.
Revenue is vanity. Keeping busy at prices that do not fund a healthy business is just an expensive way to feel wanted. If your prices have not moved in two years, they are moving backwards every day, because your costs certainly are not standing still.
Pull out your price list this week. Ask one question of it. Does this price fund the business I say I want? If not, you know what to do.
Usually far fewer than you fear, and often the ones you are better off without. On typical margins a 10 percent increase means you could lose a significant share of volume and still earn the same profit. Most owners lose almost no one.
Around 30 days for ongoing customers is fair and professional. Keep the message short and plain, state the new rate and the date it starts, and avoid apologising or over explaining. New customers simply receive the new price.
At least once a year, in line with rising wages, rent, insurance and materials. A small regular increase is easier for customers to accept than a large catch up rise every five years.
Expect a few tests in the first month and hold your position calmly. Restate the value, offer to adjust scope rather than price if they truly cannot afford it, and accept that losing an unprofitable customer is a result, not a failure.
Anderson Chong, Founder of iQuest Consulting and Business by Design.
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