Do you know who gets upset by price increases the most often? Spoiler alert: it’s not the customers. Increasing prices is an inevitable fact of growing a business: labor costs, inflation, market prices, and more can drive a business’s need to raise prices. So when we assess a business in the first few weeks of coaching, our first advice is often to increase prices.

When is the perfect time to increase prices? The ideal time is when you’re busy. You’ve got an abundance of business, and for companies such as contractors, there are often customers willing to wait quite some time to get their project on the schedule. Practices like veterinarians are busy, too. The cost of labor has gone up across the board. It’s time.


There are two calculations to keep in mind when determining price increases. The first is market-based. Imagine you’re a roofing contractor. The cost to put in a roof for a 1,500 square foot ranch at your company is $10,000. When customers call to get an estimate, they are shocked – the last three people said the cost was $20,000. When your price is so much lower than competitors’, potential customers question your quality. Most people don’t buy solely on price. If they did, they would never own a BMW – there would only be Kia’s on the road. Look at the market. Call your competitors for an estimate. You don’t want to be the lowest cost out there. But you also don’t want to double or even triple prices all at once – gradual is better.

The other calculation is Labor vs. Cost. The hot topic among every single client is the increase of wages and the labor market. High-quality candidates are simply not going to work for $10/hour anymore, even if that’s well above minimum wage. Employees can go to any Target, Costco, Amazon facility, or even McDonald’s and make more. If your labor costs go up by 10%, then your overall costs are going to go up as well. Consider a price increase of 3-5% in this case, if you know the market will bear it.


A quick, efficient, and simple communication strategy is the absolute best situation. If you are a business where customers expect to hear prices from you every time, and there’s not a published price sheet, then it’s often not necessary to communicate the price sheet to customers at all. After all, when you go to Target and milk is $0.49 higher than the last time, do you even blink an eye as a customer? Probably not. If you are taking your dog to the vet for your annual checkups, there is a rare customer that is going to remember, or care, how much a rabies vaccine costs to administer. For construction projects, the job is estimated at the beginning, and price increases are not going to be a question.

For those who have a price increase for a service that is used often, like in a business-to-business environment, then you’ve got a couple of considerations:

  1. Communicate directly, whether via email, phone, or your website if applicable. For your top 10-20 customers, make a special call to them to communicate the increase.
  2. Keep the lines of communication open. Let them know how to ask a question. Be sure the person on the other end of the phone is armed with information (more on that later).
  3. Emphasize that the increase was necessary to keep the quality that they have come to expect.
  4. Let the customers know well in advance.
  5. Provide an explanation but KEEP IT BRIEF. Customers may be less happy if they know the nitty gritty details of the change.


We mentioned above that the people most upset with the price increase are usually the ones who are going to benefit from it the most – the owner and employees. We can be our own worst enemy, and we find that often owners undervalue the service that they provide, or even have provided for free for years. There’s been many times that a fee or product has been undercharged for many years, and in fact the business is losing money on it, not making money.

Be sure that every single person, from the people who answer the phone, to the ones providing the product or service directly to customers, has a clear picture of the price increase and why it happened. You don’t need to give them every single detail, and each employee should have a script to say that addresses the price increase directly. Practice saying it too! With the employee buy-in for the reasons why, you’ll have a greater chance at success. Negative attitudes come across to all, including from the owner.


With a plan and strategies to execute the plan, you could increase your profitability in a huge way. Doing the market research, communicating effectively, and getting employee buy-in is the way to make it happen without losing your precious customers.


Do you need to analyze your pricing structure? Is it time to increases prices in your small business and you need to know how? We can help. Schedule your free, no-obligation business analysis today.

About the author,

Director of Marketing, ActionCOACH Columbus

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