How to raise your prices without losing your good customers
Margin does not collapse, it erodes a point at a time while revenue keeps rising. Here is a sequence for putting prices right that does not start with a letter to everyone.
Tommy Boyle, Founder, Business Answers · 5 March 2026 · 8 min read
The short answer
- A two point margin recovery on €4m of revenue is €80,000, which is a senior hire funded without selling an extra unit.
- Start with your smallest and your longest-standing customers. Both are usually priced on history rather than on cost to serve.
- Increase in a defined sequence rather than across the board, and give notice with a reason and a date.
- Expect to lose a small number of accounts. Losing the least profitable ones is a result, not a failure.
Most of the businesses I work with set their prices in a different economy and have never revisited them systematically. Costs moved. Wages moved. Insurance and energy certainly moved. Prices moved by whatever the last customer would accept without complaining.
Work out what you actually earn per customer first
Before touching a price, take your top twenty customers by revenue and put a gross margin beside each one. Include the real cost to serve, the site visits, the rework, the payment terms, the person who handles their queries.
That single page usually reorders the whole list. The customer everyone treats as important is often the one with the thinnest margin and the longest debtor days.
Take the increases in a sequence
First the accounts priced below cost to serve, because those are not commercial decisions, they are mistakes. Then the small accounts where the administrative load is out of proportion to the revenue. Then long-standing accounts that have never had a proper review. Leave your best-priced strategic accounts until last.
A sequence protects you. If something goes wrong you learn it on a small account rather than on the customer who represents a fifth of your profit.
Give notice, a reason and a date
Six weeks notice, a short explanation of what has changed, a specific date and a specific figure. No apology and no negotiation invited in the first sentence. Where you can, offer a choice rather than an ultimatum, the new price with the current service, or the current price with a longer lead time or a smaller scope.
Customers accept increases far more often than owners expect. What they react badly to is a surprise, or an increase that arrives with no reason attached.
Decide in advance what you will do if someone leaves
Write down, before you send anything, the number of accounts you are prepared to lose and the revenue that represents. If the increase is right, losing your least profitable customers releases capacity for better ones.
The owners who struggle with pricing are usually the ones who never decided that in advance, so the first objection becomes a full retreat.
Then put a review date in the calendar
Once a year, minimum, with the margin page updated first. Pricing that gets reviewed on a schedule never needs a dramatic correction, and a business that reviews pricing on a schedule is worth more when you come to sell it.
Do the arithmetic on how much volume an increase is worth
On a thirty percent gross margin, a five percent price increase adds the same profit as roughly a sixteen percent increase in volume, with no extra delivery cost, no extra stock and no extra people. That comparison is the reason pricing comes before growth in nearly every piece of work I do.
Run it on your own margin before you decide the market will not take it. Owners who see the two numbers side by side tend to stop treating a price review as a risk and start treating it as the cheapest project in the business.
Handle the three objections you will actually get
We will have to go to tender. Fine, and it is better to know now what your work is worth to them. Our own prices are fixed for the year. Then agree a date when the increase applies. We will have to look at alternatives. Some will look, most will not move, and the ones who move on price alone were never going to fund your next hire.
Decide your answers in advance and write them down for whoever handles the calls. An increase falls apart in the conversation, not in the letter, and it falls apart when the person answering the phone has not been told where the line is.
Do not confuse a price rise with a pricing structure
Putting everything up by a percentage is a correction. A structure is different, it decides what is included, what is chargeable, what a rush job costs, what a small order costs, and what a customer on ninety day terms pays compared with one who pays on time.
Most businesses under €10m have never had that second conversation, and it is usually where the larger and more durable gain sits. It is also the piece that is hard to design alone, because it needs someone who will argue with your assumptions and has seen how it lands in other businesses.
Talk it through
Talk your business through with Tommy Boyle
A free 30 minute call with Tommy Boyle. You bring the situation, he tells you what he would look at first and whether there is a piece of work worth doing. Nothing is sold to you on the call.
Or email tommy@businessanswers.ie
Questions owners ask
- How much can I increase prices at once?
- For accounts that are genuinely underpriced, corrections of ten to twenty percent are common and are usually accepted when the notice period and reason are clear. Across a well-priced book, an annual review in line with cost increases is the better approach.
- How much notice should I give of a price increase?
- Around six weeks for most business-to-business relationships, and longer where the customer has to reprice their own work. Notice with a specific date and figure attached is what prevents an increase feeling arbitrary.
- What if my market is price sensitive?
- Almost every market says it is. Test it on a defined group of accounts rather than assuming. Also check whether you are competing on price because of the market or because nobody has ever articulated what you do differently.
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