Should I Put My Prices Up? 7 Signs It Might Be Time

“Should I put my prices up?”

It’s a question many small business owners wrestle with, particularly when costs are rising but customers are used to paying a certain price.

The fear is understandable: what if customers leave?

But keeping prices too low has consequences too. You can find yourself working harder, taking on more customers and increasing turnover – without actually earning more.

For Warrington business owners, the answer isn't simply to increase prices. It's to understand what it really costs to provide your product or service, the value you deliver and the profit the business needs to remain healthy.

Here are seven signs it might be time to review your pricing.

1. Your Costs Have Increased but Your Prices Haven't

Think about what's happened to your costs since you last reviewed your prices.

Have you seen increases in:

• Wages?

• Supplier costs?

• Software?

• Insurance?

• Utilities?

• Rent?

• Professional services?

If your costs have risen but your prices haven't, your profit margin may gradually be shrinking.

You could be selling exactly the same amount – or even more – while keeping less of what you earn.

2. You're Busier but Not Making More Profit

This is a particularly important warning sign.

If sales and workload are increasing but profit isn't following, look at your margins.

More customers aren't necessarily the answer.

For example, imagine a service costs you £400 in time and other costs to deliver and you charge £500.

That's £100 left before your wider business overheads.

If the cost of providing that service rises to £450 but you continue charging £500, you've halved that contribution despite doing exactly the same amount of work.

Understanding your margins can tell you far more than turnover alone.

3. You Haven't Increased Your Prices for Years

When did you last review your pricing?

If the answer is “I can't remember”, that's probably a sign to take a look.

A pricing review doesn't automatically mean putting everything up.

It means checking whether your prices still reflect:

• Your costs

• Your expertise

• The time involved

• The value you provide

• Current market conditions

Pricing should be a business decision, not something you set when you start and never revisit.

4. You're Winning Almost Every Quote

Winning business is obviously good news.

But if virtually everyone says yes immediately, it's worth asking whether your prices properly reflect the value you're providing.

Look at your conversion rate alongside profitability.

Would you rather win ten pieces of work that generate very little profit, or seven that produce a healthy return and give you the capacity to deliver an excellent service?

More sales aren't always better sales. Those prospects who choose you primarily for price will liekly go somewhere else and do the same again. They may not value you for what you do.

5. You're Working Longer Hours to Earn the Same Amount

This is particularly relevant to consultants, freelancers and other service businesses.

Your own time has a value.

If you're regularly working evenings or weekends simply to maintain your income, consider whether your pricing model is sustainable.

Ask yourself:

How much time does this work really take me?

Remember to include the less obvious time:

• Preparing

• Emails

• Meetings

• Administration

• Amendments

• Chasing information

• Following up

A two-hour job can easily become a four-hour job once everything around it is included.

6. Your Business Has Improved but Your Prices Haven't

The business you run today may be very different from the one you started.

Perhaps you've:

• Gained years of experience

• Invested in qualifications

• Improved your systems

• Developed specialist knowledge

• Added services

• Improved your customer experience

If the value you provide has increased substantially, your pricing may need to evolve with it.

7. There's Never Enough Left for You

This is perhaps the most important sign.

Your business needs to generate enough to:

• Cover its costs

• Meet its tax obligations

• Pay you appropriately

• Invest for the future

• Build financial resilience

• Generate a reasonable profit

If the business can pay everyone except you, something needs reviewing.

That doesn't automatically mean pricing is the problem, but it certainly deserves investigation.

How Much Should I Increase My Prices By?

There isn't a universal percentage that's right for every business.

Before deciding, understand:

1. What it costs you to provide the service or product.

2. Your current gross margin.

3. Your overheads.

4. The profit you need the business to generate.

5. What customers value about what you provide.

6. Your position within your market.

Rather than asking “What can I get away with charging?”, a better question is:

“What price allows us to provide a good service and run a healthy, sustainable business?”

Will I Lose Customers If I Increase My Prices?

Possibly. But that doesn't automatically make a price increase the wrong decision.

Consider the numbers rather than making the decision purely through fear.

If a modest price increase improved your margin but resulted in a small reduction in customers, could you potentially earn the same – or more – while doing less work?

That's a calculation worth making.

For businesses selling to consumers, pricing also needs to be communicated clearly. Current Competition and Markets Authority guidance requires prices presented to consumers to be clear, complete and accurate, including unavoidable charges.

How Often Should a Small Business Review Its Prices?

We'd suggest making pricing part of your regular business review rather than waiting until rising costs force the issue.

At least annually, look at:

• Prices

• Costs

• Gross margin

• Profitability by service or product

• Capacity

• Customer demand

You don't necessarily need to change anything.

The important thing is knowing that the numbers still work.

Can My Accountant Help Me Decide What to Charge?

Your accountant shouldn't decide your prices for you – you understand your customers and market better than anyone.

But they can help you understand the financial side of the decision.

For example:

• What margin are you currently achieving?

• How much have your costs increased?

• Which services are most profitable?

• What would a 5% price increase do to profit?

• How much could sales fall before the increase stopped being beneficial?

Those are much more useful questions than simply looking at last year's turnover.

At Purple Accounts, we help owner-managed businesses understand what their numbers are telling them so they can make better decisions.

Find out more about working with a local Warrington accountant and our fixed fee accountancy support.

What Does a Healthy Pricing Strategy Look Like?

Good pricing isn't about being the cheapest.

Nor is it about charging as much as possible.

It's about finding a price that works for the customer and allows you to build a profitable, sustainable business.

If you're extremely busy but wondering where all the money has gone, your pricing is one of the first areas worth reviewing.

A Final Thought

Putting your prices up can feel uncomfortable.

But avoiding the question doesn't protect your business.

Know your costs. Understand your margins. Look at the value you provide.

Then make the decision based on evidence rather than instinct.

Sometimes earning more isn't about finding more customers.

It's about making sure the work you're already doing is actually worthwhile.

If you'd like clearer insight into your business numbers and profitability, Purple Accounts is always happy to have a conversation.

Call: 01925 979500 or email: enquiries@purpleaccounts.com