Raising Your Prices: When, How, and What to Say

You Are Probably Overdue

If you have not raised your prices in the last 12 months, you almost certainly need to. Here is why: inflation alone erodes your purchasing power by 3%–5% per year. Material costs, insurance premiums, fuel, and wages all trend upward. If your prices stay flat, your profit margin shrinks every single year — even if revenue looks the same.

Most small business owners wait too long to raise prices because they are afraid of losing clients. The irony is that not raising prices is what actually threatens the business. You cannot serve clients if you go under.

When to Raise Prices

Annual Adjustment

Build a standing annual price increase into your business rhythm. January 1st or the start of your fiscal year. Make it routine, not an event. A 3%–5% annual increase keeps you current with inflation and signals that your business is professional and stable.

Cost-Driven Increase

When a specific input cost jumps — materials, insurance, fuel, a new regulation — pass it through. This is not greed. It is arithmetic. If copper goes up 20%, your electrical work prices must follow.

Demand-Driven Increase

If you are booked out 6–8 weeks and turning away work, your prices are too low. The market is telling you directly. Raise prices until demand normalizes to a sustainable level.

Value-Driven Increase

When you add certifications, expand your warranty, invest in better equipment, or improve your process, your value has increased. Your price should too.

How Much to Raise

• Annual inflation adjustment: 3%–5%
• Cost pass-through: Dollar-for-dollar on the cost increase, applied to affected services
• Demand adjustment: 10%–20% until your schedule is comfortably full but not overloaded
• Value addition: 5%–15% per significant improvement

If you are significantly underpriced, do not try to correct it all at once. A 30% price hike will shock clients. Two 15% increases over 12 months is easier to absorb.

What to Say: Scripts That Work

For Annual Increases (Email or Letter)

"Starting [date], our rates will increase by [X%]. This adjustment reflects rising costs in materials, insurance, and wages, and ensures we continue delivering the quality and reliability you expect. We value your business and appreciate your understanding."

That is it. Short, factual, no apology.

For Existing Clients on Retainer

"As we head into [year/quarter], I want to give you advance notice that our retainer rates will adjust from $X to $Y, effective [date]. This reflects [specific reason: increased service scope, rising operational costs, expanded warranty]. We are happy to discuss any questions."

For Project-Based Increases

"Our current pricing for [service] is $X. This reflects our updated cost structure as of [date]. I am happy to walk you through the scope and show you exactly where the value is."

When a Client Pushes Back

"I understand. Our pricing reflects the cost of doing the work right — licensed crews, full insurance, quality materials, and a warranty you can count on. We are not the cheapest option, and we are not trying to be. If budget is the primary concern, I can adjust the scope to find a number that works."

Never apologize for your price. Explain it. Justify it if asked. But do not apologize.

The Communication Timeline

• 30–60 days notice for retainer and contract clients
• Immediate for new prospects (they never knew your old price)
• Next invoice for one-time service clients
• At renewal for annual contracts

Common Mistakes

Waiting Too Long

Every month you delay costs you money. If the increase is justified, implement it.

Asking Permission

You are not asking if you can raise prices. You are informing clients of a change. The language matters. "We are raising our prices" is different from "Would it be okay if we raised our prices?"

Treating All Clients the Same

Your best clients — the ones who pay on time, refer you business, and never haggle — can absorb and understand a price increase. The client who argues over every invoice was costing you money before the increase.

Not Raising Enough

A 2% increase barely covers inflation and is not worth the communication effort. If you are going to go through the process, make it meaningful.

Discounting Immediately After

If you raise prices by 10% and then offer a 10% "loyalty discount" to anyone who complains, you have accomplished nothing except training clients to complain.

What Happens After

You will lose some clients. That is fine — and expected. The clients you lose are typically the most price-sensitive, lowest-margin, highest-maintenance clients you have. The clients who stay are the ones you actually want.

Most owners report the same pattern: they lose 5%–10% of clients after a price increase and end up making more money with less stress. That is not a loss. That is a upgrade.

One More Thing

Your competitors are raising their prices. The ones who are not are going out of business. Do not anchor to a failing business model. Charge what you need to charge, deliver excellent work, and let the market sort itself out.