When was the last time you raised your prices? Not a small tweak. Actually raised them.
If you have to think hard about the answer, you're in good company. It's easy to set prices early on and then leave them unchanged while the business evolves. The number gets picked from what felt fair at the time, what the competition charged, and what you were nervous to go past. Then it stays put.
This post isn't here to tell you to charge more. It's here to help you work out whether your prices still make sense, because that's a question only you can answer.
TL;DR: Charging too little rarely looks like a problem. The work is busy, customers are happy, and the bank account just never moves the way it should. Signs worth checking: you haven't reviewed your prices in over a year, you're cheaper than a similar competitor and you don't know why, you feel a flinch when you send a quote, and you've never once lost a job to "too expensive." Price is one of three things that move revenue, and changing it may take less upfront investment than winning new customers, though the tradeoffs are different for every business. Before you change anything, run the numbers on your own business, then think about which of your customers are most price-sensitive and which are the most loyal.
Charging Too Little Doesn't Feel Like a Problem
That's what makes it hard to spot. No alarm goes off. The phone still rings. The calendar still fills up. Customers still seem happy.
Then you sit down at the end of the year, look at what's left, and the numbers don't match the effort.
Here's what can be going on in the background. Costs creep up the whole time. Insurance, rent, supplies, wages. Your skills get sharper and your reputation grows. And the price stays roughly where it started.
The result is a business working harder each year for about the same money. On any given day it looks fine. The squeeze only shows up when you stop and look.
Seven Signs Worth Checking
None of these on its own proves anything. Two or three together usually mean the question is worth an hour of your time.
You're busy all the time, but never comfortable. The work comes in. You put the hours in. The money doesn't follow.
You haven't reviewed your prices in over a year. Not changed them, reviewed them. A price can be right for years, but it's worth knowing that on purpose rather than by default.
You're cheaper than your nearest serious competitor and you don't know why. If your work is as good or better and your price is lower, that gap may not have been a decision. It may have just happened.
You have long-term customers on rates you'd no longer quote. They drifted onto old pricing because the conversation never came up.
You feel a flinch when you send a quote. That half-second pause before you type the number is worth paying attention to.
You don't have a clear price list. The number moves depending on who's asking. A price that shifts is harder to hold when somebody asks for a discount.
You've never once lost a job to "too expensive." This one runs against instinct. Losing the occasional quote on price isn't a failure. If every single quote turns into a sale, it's worth asking what that tells you.
Underpriced, or Priced About Right?
Read across the rows and see which side you land on.
If most of your answers sit in the left column, that doesn't mean you should raise prices tomorrow. It means the question deserves a closer look.
One Simple Way to Think About Revenue Growth
This is worth having in mind before you decide anything, because it puts price in proportion.
One simple way to think about revenue growth is that it comes from three things:
- Serving more customers.
- A bigger average sale.
- Each customer buying more often.
Most growth tactics work on one of those three.
They multiply rather than add, which is the useful part. Move each one by 10% and you don't get 30%. You get 33.1%, because 1.1 x 1.1 x 1.1 = 1.331. Say you have 1,000 customers spending $100 twice a year. That's $200,000. Add 10% to all three and you're at 1,100 customers spending $110 a little over twice a year, which comes to about $266,000. Same business, three small moves.
Now look at what each one asks of you. More customers usually means marketing money, or hours you don't have. More visits per customer usually means a loyalty program or a reminder system, something to build and then keep running. A bigger average sale means either selling more per visit, or charging more for what you already sell.
Changing a price may require less upfront investment than acquiring more customers. The tradeoffs are different for every business, though. A price change can carry customer, operational, contractual and brand costs that a marketing campaign doesn't.
What the three are useful for is noticing which of them you've actually been working on. If growth has meant "get more customers" for three years while the price sat still, that's worth knowing about your own business.
Run the Numbers on Your Own Business
The fear that stops a lot of price changes is a specific one. I'll charge more and customers will leave. Fair enough. So do the math on it instead of the worrying, because the math fits on the back of a receipt.
Say you raise prices 10% and 10% of your customers go elsewhere. Multiply it out: 1.10 x 0.90 = 0.99. Revenue lands within one percent of where it started, from about 10% fewer jobs.
Whether that's a good trade or a bad one comes down to two numbers only you have.
The first is what each job actually costs you to serve. Stock, hours, fuel, everything that goes out the door with it. If serving 10% fewer customers takes 10% less out of you, the same money for less work leaves more at the end.
The second is what happens to the time you free up. Does it get filled, or does the chair sit empty?
Run it on your own figures. Treat the math above as arithmetic, not a forecast.
The Question the Math Can't Answer
There's a second question, and this one you can't calculate. Which customers would leave?
Three questions can help you think it through, and only you can answer them. Which of your customers are the most price-sensitive? Which are the most loyal? And which relationships matter most to the business, for whatever reason?
You already know the shape of those answers for your own business, and they shape the decision more than any percentage does. A price change doesn't only change what you charge. It changes who chooses you, and only you can say whether that trade works.
Where Mighty Fits In
Pricing is one side of margin. Costs are the other.
Mighty helps small businesses discover savings and services that can reduce everyday business expenses. Learn more about how Mighty can help.
So sit with the question for a minute. When was the last time you actually looked at your prices? If the answer is "a while ago," it's worth an hour with your own numbers.
And if those numbers say the price should move, the next question is how to tell people. We wrote that one up separately: How to Raise Your Prices Without Losing Customers.