Should I Increase My Prices — and How Do I Know?

A price increase is usually justified when your costs have risen, your margin has been quietly eroding, or your price has genuinely fallen behind the value you deliver relative to the market. The real risk isn't raising prices — it's raising them without a clear rationale, without warning, or without confidence in the value you're actually providing.

• Your gross margin has been trending down over the last several months, even though sales volume looks steady or growing.

• Supplier, wage or material costs have increased and haven't been reflected in your prices.

• You haven't reviewed pricing in over a year — a long gap on its own is a reasonable trigger to check.

• You're consistently busy, or regularly turning away work, which often signals prices are below what the market would bear.

• Competitors in your space have moved their pricing and you haven't reviewed where you sit.

1. Know your numbers first. Understand your current gross margin, and how a specific price increase would actually change it.

2. Segment before you increase everything at once. Some products, services or customer segments may support a bigger increase than others.

3. Benchmark against the market. Where do you genuinely sit relative to competitors — and does your value justify the gap either way?

4. Decide on timing and communication. A clear, calm notice — with a reason, if appropriate — lands very differently from a silent change customers discover on their next invoice.

5. Start with new customers, if that's lower risk. Adjusting pricing for new business first, before revisiting existing customer pricing, can ease the transition.

6. Monitor the response. Track whether volume changes meaningfully, and whether the margin improvement outweighs any volume lost.

A relatively modest price increase often requires losing surprisingly few customers to still come out ahead, because the increase drops straight to margin, while a lost sale only costs you the margin on that one sale — not the full price. Running the actual numbers for your specific margin, rather than assuming any price increase is inherently risky, often makes the decision clearer than the fear suggests.

Costs rarely stay flat. A business that hasn't adjusted pricing in a while isn't maintaining the status quo — it's allowing margin to be quietly eaten by inflation in wages, materials and overheads, one small increase at a time, without ever making a deliberate decision about it.

• Has my gross margin moved in the last six to twelve months, and do I know why?

• When did I last review pricing — genuinely, not just adjusted it in passing?

• Have my direct costs risen without a corresponding price adjustment?

• Do I have a clear, calm way to communicate a change, if I decide to make one?

• you want to model exactly how a price change would affect your margin and profit before deciding;

• you're not sure how your pricing compares to your market or competitors;

• you want to segment pricing across products, services or customer groups strategically; or

• you're planning a significant increase and want the communication and timing handled carefully.

→ What Is a Healthy Profit Margin for My Business?

→ My Revenue Is Growing but My Profit Isn't — What's Going Wrong?

→ Revenue, Gross Profit, Net Profit and Cash — What's the Difference?

SKC Accounting | Knowledge Centre | Knowledge Guide 040

Last reviewed: August 2026

General information only. This guide does not take into account your individual circumstances and is not a substitute for professional accounting, taxation, legal or financial advice.