- Enquiry
- Quote
- Agree
- Work
- Invoice
- Paid
Raising Prices
Most small firms raise prices later than they should and by less than they need, and the reason is a conversation nobody wants to have.
For a software-side reference alongside this discussion of pricing, labour cost, and small-business finance, Monitask has this resource.
When it is due
When your costs have risen. Materials, insurance, fuel, tools — all of which have moved substantially in recent years and none of which asked permission.
When the review shows the rate is below where it should be.
When you are consistently busy. A firm turning work away is priced below the market, and the market is telling you clearly.
When the work has changed. More scope, more skill, more responsibility than when the price was set.
And on a schedule regardless. An annual review, applied or not, is the practice that prevents a five-year gap followed by a thirty per cent correction — which is the version that loses customers.
What actually happens
Less than people fear.
Most customers accept it. They have watched their own costs rise and they expect suppliers' to have done the same.
Some ask about it, and a straight answer settles it.
A few leave, and they are usually the ones who were least profitable — the price-sensitive customer is frequently also the difficult one.
And the ones who stay are worth more per hour, which means a small loss of volume at a higher price is frequently a better business.
How to say it
In advance, in writing, once.
"From the first of April my rates are going up by about eight per cent — first increase in two years. Everything quoted before then is unaffected."
Four elements: a date, a size, a reason implied by the interval, and reassurance about existing commitments.
No apology. An apology invites a negotiation about whether it is justified.
No long explanation. The same principle as declining a job — a detailed justification gives somebody a list of things to argue with.
Where to apply it first
New customers.
A price raised for new enquiries only produces information within weeks: if the conversion rate holds, the old price was low, and the increase can then be extended to existing customers with evidence rather than nerve.
Then existing customers at a natural boundary — a year end, a new job, an anniversary.
And last, or never, the ones where the relationship is worth more than the difference. That is a legitimate commercial judgement provided it is made rather than defaulted into.
The customer who objects
Ask what they are comparing to.
Frequently the answer is a lower quote for a different scope, or a firm they have not used, or a price from four years ago.
Where the objection is genuine and the relationship matters, options exist that are not a straight reduction: a smaller increase this year and the rest next, a change of scope, or a payment term that suits you in exchange.
What does not work is holding the old price and resenting it, which is how a good relationship becomes a bad one over eighteen months.
The increase that is not a price rise
Sometimes the answer is a different structure rather than a bigger number.
A minimum charge for small jobs, which is where the losses usually are.
A call-out or travel charge beyond a radius.
Charging for what was free — site visits where diagnosis is involved, materials collection, out-of-hours work.
Each of these raises what you earn without touching the headline rate, and each is easier to introduce because it is a new item rather than an increase in an old one.
Telling them how much notice they get
A month is standard and generous.
Less than that reads as abrupt with regular customers, and more than that gives everybody time to think about it, which is not to your advantage.
Where a customer has a job already quoted, honour it. A quote with a validity period is a commitment for that period, and honouring it while raising everything else is the version that keeps goodwill intact.
Raising them mid-relationship without a review
Occasionally a single customer needs a different price and the others do not.
A customer whose work has become more demanding, or whose payment behaviour costs you, or who consumes hours that the original price never contemplated.
Handle it as a scope conversation rather than a price one: "The job has grown quite a bit since we set the rate — I'd like to reprice it for next year."
Framing it around the work rather than around them keeps it factual, and it is usually true.
Where it is really about behaviour, the structural answer is better than a price one: a deposit, stages, payment before the next phase.
Not raising them
A legitimate choice, made deliberately.
Where you are already at the top of what the local market bears, where volume matters more than margin this year, or where a relationship is worth protecting through a difficult period for the customer.
What makes it a choice rather than a drift is that you did the review, decided, and wrote down when to look again.
The rate card nobody sees
Even where you do not publish prices, having them written down changes how you quote.
A private list of standard prices for the work you do most removes the improvisation, makes quoting faster, and makes an increase a single edit rather than a decision repeated at every enquiry.
It also shows you what you actually charge, which is frequently not what you believe you charge — the number drifts downwards under pressure and nobody notices without a reference.
Review it when you review the rate, and treat a quote below it as a deliberate decision rather than a negotiation you lost.
The short version
- Firms raise prices later and by less than they need, because of a conversation nobody wants
- It is due when costs rise, when the rate review says so, when you are consistently busy, when the work has changed, and annually regardless
- An annual review prevents the five-year gap followed by a large correction, which is the version that loses customers
- Say it in advance and in writing: a date, a size, an implied reason, and reassurance about existing quotes — with no apology
- Apply it to new customers first, which produces evidence within weeks, then to existing ones at a natural boundary
- Holding an old price and resenting it turns a good relationship into a bad one within about eighteen months
For broader background on pricing, labour cost, and small-business finance, see LawDepot.