Pricing Checklist: 10 Questions to Ask Before Raising Prices

Raising prices is the quickest way to improve a business's finances, and the easiest way to lose customers. That tension is why so many owners put it off — absorb another supplier increase, promise themselves they will look at it next quarter, and watch the margin thin out month by month.

The businesses that get this right tend to follow the same order: check the arithmetic, read the market, then decide what to say. Here are ten questions worth answering before you touch a price list.

Start with the numbers, not the nerves

Most price rises go wrong at the first step, because the starting point is a competitor's quote or a round number that "feels about right". Neither tells you whether the change makes you money.

Work out your full cost per job or per unit: materials, delivery, payment fees, packaging, wastage, and your own time if you sell hours. Add the share of overheads each sale has to carry — rent, insurance, software, the van. Then compare that with what you charge. The gap is your margin, and it is almost always smaller than owners assume.

Margin matters because a price rise falls straight to the bottom line. A business earning 15p in the pound that puts prices up by 5% adds roughly a third to its profit, if costs and volumes hold. The same maths works in reverse, which is the useful part: at that margin you could lose around a quarter of your sales and still be no worse off. That figure is your room for manoeuvre, and it is worth knowing before anyone argues with you.

Then check the calendar. Have your costs risen since you last changed prices? If it has been three years and your supplier has increased twice, you are not raising prices — you are catching up.

VAT is part of the pricing decision

If you are not VAT-registered, a price rise can take you across the registration threshold. Once registered, VAT has to be added to your prices or absorbed out of your margin, and absorbing it at the standard rate is a serious hit. Check the current threshold and rates on HMRC's website, or ask your accountant, because both change.

If you are registered, remember that the figure on your invoice is not your money. Decisions about discounts, minimum order values and "we will match that price" should be made on the net amount. And if you choose to hold your gross price steady to stay competitive, be clear that you are paying for that decision out of your own margin.

Tax rules and thresholds shift, so treat anything you read here as a prompt to check your own position rather than a substitute for advice from an accountant.

Will customers actually pay more?

Ask before you announce. Not "would you mind paying more?" — that question has only one polite answer — but a real one: "We are reviewing our rates for next year. What matters most when you choose a supplier?" Listen for price sensitivity, and for everything else.

Look at your own evidence too. If most quotes turn into work and your diary is full, you are probably underpriced. If you are winning on price alone and still not profitable, that is not a strategy, it is a slow leak.

Not every customer deserves the same treatment. Long-standing accounts, customers on fixed contracts and anyone holding a signed quote may need a different date or a staged rise. Deciding that in advance stops you making exceptions in a panic.

Competitors: useful, but not the answer

Know where you sit against the businesses your customers actually compare you with — not the cheapest one in the country, the one across town. Then ask why people choose you: speed, reliability, finish, availability, the fact that you answer the phone.

Copying a competitor's price assumes they have got theirs right. Plenty are cheaper because they are bigger, and plenty are cheaper because they are losing money. Use their prices as context, not as instruction.

The ten questions, in one place

1. What does each sale cost me, all in?
2. What margin am I really making at today's prices?
3. How much volume can I lose before the rise costs me money?
4. Am I VAT-registered — and what does VAT do to the price my customer pays?
5. Which of my costs have gone up since I last reviewed prices?
6. Do I have evidence that customers will pay more, not just hope?
7. Which customers, contracts or quotes need special handling?
8. How do I compare with the competitors my customers mention?
9. Who needs to be told, in what order, and how much notice do they need?
10. When will I review this price again?

How to tell customers

Do it in writing, even if you also say it on the phone, and give more notice than feels comfortable. Lead with the date and the new price, then give one honest reason. Long apologies and vague talk about "rising costs" make people suspicious; a short, clear message does not.

From 1 October, our standard callout rate will be £X. That is the first increase since 2022 and reflects higher fuel and parts costs. Any job booked before 30 September stays at the current rate.

A few practical things that make the conversation easier:

• Tell people in a sensible order — regular customers first, and never let a long-standing client find out from a new price list.
• Give a cut-off date so people can book at the old price. Most of them will.
• Offer a smaller or simpler option for anyone who genuinely cannot stretch, rather than a discount that undercuts your new rate.
• Brief everyone who deals with customers, so the same message comes from every voice.
• Expect a handful of losses. That is normal, and it is often the least profitable handful.

Give it time, then review

Do not judge the rise in the first fortnight. Watch conversion, cancellations, average order value and how many quotes go quiet over the next two or three months. Some customers will grumble and stay; a few will leave, and you want to know whether the extra margin covered them.

Then pick a date to look again — many businesses do it annually, alongside a budget review — and put it in the diary. Prices drift downwards through discounts, goodwill and "just this once" deals. A standing review stops that happening quietly.

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