How to know if it's time to raise your prices
Three honest signs it's time to raise your small business's prices, and why waiting usually costs more than raising them ever will.
TL;DR — If you are consistently busy, have not raised prices in over a year, or quietly dread a particular job because it does not pay enough for the hassle involved, then it is probably time to raise your prices. Most owners wait considerably longer than they should, and a reasonable increase costs you fewer customers than you would expect.
If you are consistently busy, if you have not raised prices in over a year, or if you find yourself quietly dreading the next job because it does not pay enough for the hassle involved, then it is probably time. Most small business owners wait considerably longer than they should, because raising prices feels like a confrontation rather than a normal and entirely expected part of running a business.
Being consistently busy is the clearest signal
If you are turning away work, or booking several weeks out, or consenting to everything because you are afraid of saying no, then your prices are telling you something reasonably specific.
Demand that outstrips your available capacity is the market’s way of indicating that you are underpriced — rather than an instruction to work additional hours.
A year without a price change is a real cost
Materials, rent, insurance, and your own time all become more expensive every year, quietly and without announcement. If your prices have not moved throughout that period, your margin has been shrinking the entire time, even though nothing sufficiently dramatic occurred to make the erosion noticeable.
Review your pricing at least annually, deliberately, in the same manner you would review anything else that drifts when left unattended.
Dread is data
If a particular category of job makes your stomach sink when it arrives — not because the work is difficult, but because it does not pay enough for what it genuinely costs you — that constitutes real information rather than mere temperament.
You are under no obligation to continue offering it at the previous price, or indeed to continue offering it at all.
Raising prices is a smaller deal than it feels like
Most owners picture an incoming wave of indignant customers. In practice, a reasonable increase loses you a small number of your most price-sensitive customers — frequently the very ones costing you the most time relative to what they actually pay — while the remainder barely register that anything happened.
You can announce it plainly: “Starting next month, prices are going up to keep up with costs.” You are not required to apologize for operating a business that has to remain solvent.
If you would like a second, disinterested opinion on your specific numbers before deciding, that is precisely what a working session on pricing exists for. Sometimes the honest answer is that you are entirely fine as you are, and we will tell you that as readily.
If you run a practice
Pasadena Works helps independent medical, dental, and eye care practices in the San Gabriel Valley get more patients and run a calmer front office. We are paid by the practice and nobody else, so we will tell you when something is not worth what it costs.