Price Rises: When, Why and How to Increase Your Prices
Let's talk about something that makes a lot of business owners uncomfortable.
Raising your prices.
You know your costs have increased.
You know you're providing more value than you were a few years ago.
You might even know that your prices aren't really working anymore.
But then comes the thought...
"What if my clients leave?"
So you put it off.
And then put it off a little longer.
I'll admit, I'm guilty of not reviewing my own fees often enough because increasing prices makes me uncomfortable too.
But as business owners, sometimes we have to have the uncomfortable conversations.
Because if everything around you is getting more expensive but your prices stay exactly the same, you're effectively giving yourself a pay cut.
Why Do Prices Need to Increase?
Your business today probably costs considerably more to run than it did a few years ago.
Software subscriptions increase.
Wages increase.
Insurance increases.
Professional fees increase.
Utilities increase.
Pretty much everything increases!
And that's before considering the additional experience, knowledge and value you've built over time.
If your costs increase but your prices don't, something eventually has to give.
Usually, it's your profit.
A business can have growing turnover and still become less profitable if its margins are being squeezed.
That's why pricing shouldn't be something you decide when you first start your business and then forget about.
When Should You Raise Your Prices?
There isn't one perfect time.
But there are some signs that it's probably time to review them.
Perhaps:
Your costs have increased significantly.
Your profit margins are shrinking.
You're incredibly busy but don't seem to be making any more money.
Your service has evolved since your prices were originally set.
You're charging considerably less than comparable businesses.
You've added additional support without adjusting your fees.
You haven't reviewed your prices for several years.
You don't necessarily need to increase everything just because one cost has gone up.
But you should understand what it actually costs to provide your product or service.
Without knowing that, it's very difficult to know whether your pricing still works.
How Often Should You Review Your Prices?
I think there's an important difference between reviewing your prices and increasing them.
You don't necessarily need to increase prices every year.
But you should review them regularly.
For many businesses, an annual pricing review is a sensible habit.
Look at:
Your costs.
Your margins.
Your competitors.
Your capacity.
The value you're providing.
How profitable different services or products actually are.
You might review everything and decide your prices are absolutely fine.
Great.
But at least you've made that decision based on the numbers rather than simply carrying on because changing them feels awkward.
"But What If I Lose Clients?"
This is probably the biggest fear.
And yes, increasing your prices may mean that some clients decide to leave.
But that doesn't automatically mean you've made the wrong decision.
Imagine you're charging £100 for something that genuinely needs to be £130 to remain worthwhile.
Keeping every client at £100 isn't necessarily better for your business.
You're busier, but you're not necessarily making enough money from that work.
Sometimes losing a small amount of work at an unsustainable price can actually create capacity for better, more profitable work.
That doesn't mean you should suddenly double your prices and hope for the best!
Pricing increases should be considered, reasonable and communicated properly.
How Do You Increase Prices Without Losing Clients?
Communication makes a huge difference.
Give people notice.
Be clear about when the new price takes effect.
Keep the explanation simple.
You don't need to send your clients an essay justifying every penny.
Something along the lines of:
"We've reviewed our pricing to reflect increased operating costs and the level of service we now provide. From [date], your fee will increase from £X to £X."
That's often enough.
Where appropriate, you can also explain improvements you've made to your service or additional value clients now receive.
Most reasonable clients understand that businesses occasionally need to increase their prices.
After all, their costs are probably increasing too.
Don't Apologise for Running a Sustainable Business
This is the part many of us struggle with.
The awkwardness.
You write the email.
Read it.
Rewrite it.
Read it again.
Hover over send.
Then wonder whether you could perhaps just leave the price alone for another year 😂
But increasing your prices isn't something you need to feel guilty about when there's a genuine business reason behind it.
You're not asking your clients for a favour.
You're setting a price that allows you to continue providing the service they value.
There is a difference between increasing prices simply because you can and increasing them because your current pricing is no longer sustainable.
Let Your Numbers Help You Decide
Pricing decisions shouldn't just be based on what feels right.
Your bookkeeping can help you understand:
Your gross profit margins.
How your costs have changed.
Which areas of the business are most profitable.
Whether increased turnover is actually translating into increased profit.
Whether you have enough margin to absorb further cost increases.
That's where having accurate, up-to-date numbers becomes really valuable.
They take some of the emotion out of the decision.
Instead of thinking:
"I feel like I should probably put my prices up..."
You can say:
"My costs have increased by X, my margin has fallen to Y, and my current pricing isn't sustainable."
That's a much easier decision to stand behind.
Don't Wait Until You Have No Choice
One of the biggest mistakes is waiting until your margins have been squeezed so much that you need to make a significant increase all at once.
Smaller, considered reviews are often much easier for both you and your customers to manage.
So if you haven't looked at your pricing for a while, perhaps it's time.
Not necessarily to increase it.
Just to check.
Are your prices still covering your costs?
Are you making the profit you expected?
Has the value you're providing increased?
And most importantly...
Is the price you're charging still working for the business you're running today?
Because everything else has probably gone up.
Your prices can't stay the same forever.
At Eden Bookkeeping Solutions, we help business owners understand what's really happening behind their numbers, so decisions like pricing aren't based purely on gut feeling.
If you're unsure whether your current pricing is still working for your business, we're always happy to chat 💚
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