Raising prices feels risky because you can see the customers who might leave. You cannot see the money you lose every week by staying cheap. This guide helps you put numbers on both sides.
Work out your break-even first
Before you change anything, find out how many customers you could lose and still come out ahead. Use this formula.
Break-even volume loss = X ÷ (M + X)
X is the size of the price rise. M is your current profit margin on the job. Write both as a share of the price, so 10% is 0.10. The answer is the share of your jobs you could lose before the higher price stops paying for itself.
Illustrative example. A job sells for $100. It costs you $80 in labor (labor), materials and fuel. Your margin is 20%, so M is 0.20. You raise the price 10%, so X is 0.10. Break-even is 0.10 ÷ 0.30, which is one third.
Check it. Before the rise, 100 jobs at $20 profit each is $2,000. After the rise, 67 jobs at $30 profit each is about $2,010. You lost a third of your jobs and made the same money, with a third less work to do.
Here is the same formula for a few margins and rises. These are illustrative numbers only. Use your own.
| Your margin (M) | 5% rise | 10% rise | 15% rise |
|---|---|---|---|
| 10% | 33% | 50% | 60% |
| 20% | 20% | 33% | 43% |
| 30% | 14% | 25% | 33% |
Each cell is the share of jobs you could lose and break even. Notice the thinner your margin, the more a rise helps you.
One warning. The formula assumes a lost job also takes its costs with it. If losing a job leaves a crew idle on wages you still pay, your real break-even is lower. You can test your own numbers with the price increase calculator.
Decide the size of the rise
- Start from your costs. List what has gone up: wages, fuel, insurance, supplies, software.
- Check the margin on each type of job. Raise the most where the margin is thinnest. Job costing shows you which jobs those are.
- Pick a number you can explain in one sentence. One clear rise with a reason is usually easier to explain than small rises every few months.
- Do not mix up markup and margin when you set the new price. A 20% markup is not a 20% margin. See profit margin vs markup.
Choose your timing
- Give notice early. For regular customers, 30 days or more is fair.
- Tie the change to a fixed date, such as the first of a month or the start of a season.
- Do not send the notice right after a mistake or a complaint. Fix the problem first.
- Apply the same date to everyone in the same group, so no one feels singled out.
Word the notice
Keep it short, calm and specific. A good notice does four things.
- Says what changes and when.
- Gives one honest reason.
- Tells them what stays the same, such as the crew and the quality.
- Thanks them.
Sample wording: Starting the first of next month, our price for this service will go from $X to $Y. The cost of labor, fuel and insurance has gone up, and this lets us keep the same crew and the same standard of work. Any job booked before that date keeps today’s price. Thank you for your business.
Do not apologise, and do not bury the number. Both make the rise sound like something you are ashamed of.
Grandfathering or across the board?
- Across the board. Simple and fair. You recover your margin fastest. Some loyal customers may feel the sting.
- Grandfathering. Old customers keep the old price. It protects loyalty, but those jobs stay thin forever and drag down your average.
- The middle path. Give existing customers a set period at the old price, such as one season, or a smaller first step. Put the end date in the notice.
Offer tiers
A basic, standard and full-service option lets customers choose. The price-sensitive customer can pick the lighter option and stay with you. You still earn a healthy margin on each tier, as long as you priced each one from its own cost. Never quietly cut the work to hold a price. Say what each tier includes.
When customers push back
- Listen first. Ask what worries them most.
- Repeat the reason once, calmly. Do not argue.
- Offer a choice, not a discount. Change the scope, the visit schedule or the tier.
- If you do give a discount, make it one time, in writing, with an end date.
- Know your floor before the call. Your floor is the price at which the job still earns what you need. A customer who needs a price below it costs you money.
Remember the break-even formula. Losing a few price-driven customers is often cheaper than you fear.
Track what happens afterwards
- Count how many customers accepted, asked questions, or left.
- Compare profit per job before and after, not just total sales. Sales can rise while profit falls.
- Check again after 60 to 90 days.
- Write down why people left. Patterns tell you if the size, the timing or the wording was the problem.
- Use what you learn to set the next rise. Start with how to price a job if your base prices need a reset.
CrewBrain tracks the real cost and profit of each job, so you can see which prices need to move and what happened after you changed them.
Keep reading
- Price increase calculator
- Signs You Are Underpricing Your Services
- Job costing: find the jobs that quietly lose you money
- All guides and free calculators
Questions owners ask
How much can I raise prices without losing customers?
There is no safe number for every business. Use the break-even formula, X divided by (M plus X), to see how many jobs you could lose and still earn the same profit.
How much notice should I give before a price increase?
For regular customers, 30 days or more is a fair standard. Give a fixed date, a short reason, and tell them any job booked before then keeps the old price.
Should I raise prices for all customers at once?
Raising for everyone is simplest and recovers margin fastest. If you grandfather loyal customers, give the old price an end date so thin jobs do not last forever.
What do I say when a customer says the price is too high?
Listen, repeat the reason once, and offer a choice such as a lighter scope or tier instead of a discount. Know your floor price before the call.