- Why most growing businesses are undercharging (and how to know if you are)
- When the right time to raise prices actually is
- How to communicate a price increase without losing good customers
- How much to raise prices — and what to expect when you do
At some point, every growing business needs to charge more. Your costs increase as you hire, improve your tools, and invest in quality. Your expertise grows. Your time becomes more scarce. And the price you charged when you were starting out is no longer sustainable or appropriate.
The problem is that most founders are terrified to raise prices — convinced that customers will leave, that they'll be seen as greedy, or that they'll lose the competitive edge that got them this far. In almost every case, these fears are overstated.
Why most growing businesses undercharge
The price you charge today is often based on what felt right when you were starting out — when you needed customers, when you doubted whether people would pay, when you were competing on price because you had nothing else to compete on.
Two years later, you have a track record, testimonials, and a reputation. But your price is still the same. Your value has increased; your price hasn't.
Businesses that undercharge are often the most overworked. They take on more clients to compensate for low margins, which means less time per client, which means worse results, which makes it harder to justify higher prices. The only way out is to charge more and do less, better.
When to raise your prices
You should raise your prices when:
- You are consistently at full capacity — if demand exceeds supply, your price is too low
- You haven't raised prices in 12+ months — inflation alone justifies annual increases
- Your quality and results have improved significantly since you last set your price
- Your margins are too tight to reinvest in quality, people, or tools
- You are attracting price-sensitive clients who are disproportionately difficult to work with
How to raise prices without losing customers
The lowest-risk way to test a new price is to apply it only to new customers. Quote your next 10 enquiries at the new price and measure the conversion rate. If it doesn't change significantly, your new price is right.
If conversion drops sharply, either your price increase is too large for your current positioning, or you need to improve how you communicate your value.
Existing customers deserve notice — and treating them well when you raise prices is an act of respect that often deepens the relationship rather than damaging it.
Communicate price increases at least 30-60 days in advance, give a clear reason (your costs have increased, you have invested in your team or tools, you are raising your standard of service), and thank them for their loyalty.
Optionally, offer to lock in their current rate for a final period — "we're honouring your current rate until the end of the year, after which the new rate applies" — which gives them a reason to stay.
The easiest price increase to communicate is one that comes alongside a genuine improvement in what you offer. If you've hired a specialist, invested in better technology, improved your process, or added a new deliverable, use this as the context for the increase.
"We've invested in [improvement] to deliver better [outcome] for our clients. Our prices will reflect this from [date]." This is honest, positive, and focuses on the customer rather than on your costs.
Some customers will leave when you raise prices. This is normal and, in many cases, healthy. The customers who leave are typically the most price-sensitive and the most demanding — often the ones generating the most stress for the least margin.
In almost every case, raising prices and losing 20% of your customers while retaining 80% at a higher margin results in a healthier, more profitable, less stressful business.
How much should you raise prices?
For an annual inflation-linked increase: 5-10% is standard and easy to justify.
For a strategic repositioning: 20-50% is not unusual for a business that has significantly improved its quality, specialisation, or results. At this level, you are not just adjusting for costs — you are repositioning your brand.
A freelance web designer charging €2,000 per project raises to €3,000. They lose 3 of their 10 regular clients — all of them the most demanding and slowest to pay. The remaining 7 clients at the higher rate generate more revenue with less work. The designer is less stressed, has more time for each project, and delivers better work. All 7 remaining clients are happier.
The bottom line
Raising prices is one of the highest-return decisions a growing business can make. Done well — with advance notice, a clear reason, and genuine improvement in value — it almost always improves the business, the team's wellbeing, and the quality of service you can offer.
If you haven't raised your prices in the last 12 months, you are almost certainly undercharging. The best time to change that is now.