How to raise your prices without losing good customers
If you haven’t raised prices in a while, you’ve already given yourself a pay cut. Here’s how to fix it with your best customers still on the schedule.
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Key takeaways
- If your costs have gone up and your prices haven’t, you’ve already taken a pay cut.
- Base the increase on your own numbers: how much your cost per hour has risen.
- Quote new customers at the new rate right away, and give existing customers notice, usually about 30 days.
- Keep the message short and confident. Most good customers stay.
Fuel, insurance, equipment, and wages all cost more than they did a few years ago. If your prices haven’t moved to match, you’re doing the same work for less money every season. For a lot of small service businesses, the fear of losing customers keeps prices frozen long after they should have gone up.
Raising prices is uncomfortable, but it’s rarely as risky as it feels. Here’s how to decide when and how much, and what to say.
Signs it’s time
If any of these are true, look at your prices
- You’re booked solid weeks out and turning work away
- You win almost every quote you send
- Your costs have gone up since you last set prices
- You haven’t raised prices in more than a year
- Job costing shows some services barely breaking even
- You’re working more hours for the same take-home pay
Winning nearly every quote feels great, but it’s usually a sign you’re the cheapest option, not the best value.
Work out how much from your own numbers
The cleanest way to set an increase is to measure how much your costs have actually risen. Re-run your cost per crew hour with this year’s wages, fuel, insurance, and equipment, and compare it with last time.
New price = current price × (new cost per hour ÷ old cost per hour)
- Current price
- What you charge for the service today.
- Old cost per hour
- Your cost per crew hour when you last set prices.
- New cost per hour
- Your cost per crew hour with this year’s numbers.
Example: keeping the same margin as costs rise
- Old cost per crew hour
- $73.00
- New cost per crew hour
- $78.00
- Cost increase ($78 ÷ $73)
- 6.8%
- Current weekly mowing price
- $69.00
- $69 × 1.068
- $73.69
- New price
- $74.00
If you’ve never calculated your cost per hour, start with how to price lawn mowing jobs. The worksheet works for any trade.
New customers first
You don’t need anyone’s permission to quote new work at your new prices. Update your saved prices and every quote from today forward uses them. New customers never see the old number, so there’s nothing to explain.
Give existing customers notice
For recurring and repeat customers, give notice before the new rate starts. About 30 days is common, and the start of a season is a natural time for it. Customers find a new price at renewal much easier to accept than a surprise halfway through the season.
What to say
Keep it short, confident, and specific. Don’t over-apologize or write three paragraphs justifying it. Thank them, give the new price and the date, and move on.
Price increase letter
Hi [First name], thank you for trusting [Business name] with your [service] this past year. To keep up with rising costs and keep delivering the same quality, our rate for [service] will be [$74] per [visit] starting [March 1]. Nothing else about your service changes. If you have any questions, just reply or call me at [phone]. We appreciate your business! – [Your name]
Handling pushback
Most good customers accept a reasonable increase without comment. A few will push back. Have a calm answer ready.
- Listen, then explain briefly: your costs went up and you want to keep doing good work.
- Offer options if they exist, like less frequent service or a smaller scope.
- Don’t cave on the spot. A discount for whoever complains is unfair to everyone who didn’t.
- If a customer leaves over a fair increase, that spot can go to someone who values the work.
Make it a habit
Small, regular increases are much easier than a big one every five years. Review your costs every winter, before renewals go out, and adjust. Customers get used to a modest yearly change far more easily than a sudden jump.
Job costing shows you which services need it most, and a clear quote makes the new price easy to accept.
Common questions
Should I raise prices for all customers at the same time?
Many businesses do it once a year, for everyone, at the start of the season. It’s simpler to manage and explain. New customers get the new rate right away.
How often should I raise prices?
Reviewing prices every year is a good rhythm. Small, regular increases are easier for customers to accept than rare, large ones.
Do I need to explain why I’m raising prices?
A short reason, like rising costs, is enough. Long explanations can sound defensive and invite negotiation.
What if a long-time customer threatens to leave?
Thank them for their loyalty, explain briefly, and offer an option if you have one, like adjusting the scope. If the price is fair, it’s okay to let them decide.
