To raise prices without losing many customers, base the increase on your real costs, apply it on a planned date, give recurring customers advance written notice, and explain it simply without apologizing. New customers just see the new prices. Most loyal customers accept a reasonable, well-explained increase, and the few who leave are often the ones who were least profitable to serve.
Raising prices feels risky, especially for owners who built the business on relationships. But not raising them is riskier. Costs rise every year, and if your prices don't, your margin quietly shrinks until the business can't afford good techs, good trucks or your own salary.
How do you know it's time to raise prices?
Some signals are in your numbers. Others are on your calendar.
In your numbers:
- Your gross margin has slipped compared with a year or two ago
- Parts, fuel, insurance or wages have gone up since your last increase
- You're paying techs more to keep them, but charging the same
- Your profit at year end doesn't match how busy you were
On your calendar:
- You're booked out for weeks and turning work away
- You win nearly every quote you send. A very high close rate can mean your prices are below what customers would accept.
- You haven't changed prices in more than a year
If two or three of these apply, it's time.
How much should you raise prices?
Work it out from your costs, not from a round number.
- Total up how much your costs have changed since your last price review: wages, payroll taxes, parts, fuel, insurance, rent, software.
- Work out what your prices need to be to get back to your target margin. If you need help with the math, our guide to markup vs. margin shows how to price from cost to a target margin.
- Decide whether to apply it evenly or selectively.
Selective increases are often smarter than across-the-board ones:
- Underpriced tasks. Jobs that consistently run long or use more parts than priced should go up the most.
- Parts and equipment. If supplier costs went up, reprice those items to match.
- After-hours and emergency work. Often underpriced compared with the disruption it causes.
- Small jobs and minimum charges. Raising the minimum often has a bigger effect than raising large jobs.
Keep the increase in proportion to what changed. Customers can tell the difference between "costs went up" and "let's see what we can get."
When is the best time to raise prices?
Good times:
- At the start of a year or season. Customers expect changes then, and it's easy to give a clear effective date.
- Before your busy season. Demand is high, and customers who need you are less sensitive to price.
- When you add something of value, like better warranties, faster response or online booking and payment.
Times to avoid:
- In the middle of a job or an open quote. Honor the quote you gave.
- Right after a service problem with that customer.
Who needs to be told, and who doesn't?
New customers don't need an announcement. They see your current prices when you quote.
One-time and occasional customers generally don't need a letter either. Your next quote simply reflects the new price.
Recurring customers need advance notice. That includes anyone on a regular schedule, like weekly lawn care, biweekly cleaning, quarterly pest control or monthly pool service, and anyone on a contract.
Members of a maintenance plan need notice before their renewal. Check your membership terms for what they say about price changes, and apply new prices at renewal, not in the middle of a paid term.
Commercial customers may have contracts that set prices or say how they can change. Read the contract first.
How should you tell recurring customers?
Give them notice in writing: by email or letter, at least 30 days before the change, and longer for annual contracts. Keep it short and calm:
- Thank them for their business
- State the new price and the date it takes effect
- Give a one-sentence reason
- Remind them what they get
- Invite questions
A sample message you can adapt:
Hi Maria,
Thank you for trusting us with your lawn for the past three seasons. Starting March 1, your weekly mowing will be $52 per visit, up from $48. Our fuel, equipment and labor costs have gone up, and we want to keep paying our crews well and showing up on time every week.
Nothing else about your service changes. If you have any questions, just reply to this email or call us at 555-0142.
Thanks again, Sam
What to avoid:
- Long apologies. They suggest you're doing something wrong.
- Blaming specific people or events in detail. One simple reason is enough.
- Surprises on the invoice. The worst way to raise prices is to let customers discover it.
Should you grandfather existing customers?
Sometimes, briefly. A few common approaches:
- Same increase for everyone, with notice. Simplest and fairest.
- A delay for longtime customers, like applying the new price a season later. A nice gesture for your most loyal accounts.
- Members keep a lower price, as long as they stay members. This turns the increase into a reason to join your plan.
Avoid grandfathering indefinitely. After a few years you end up with customers paying very different prices for the same work, which is hard to manage and hard to explain.
What should you say when a customer pushes back?
Stay calm, listen and don't argue. Most pushback is a question, not a refusal.
- "Why did it go up?" Give the honest reason in a sentence or two. Costs rose, and you want to keep the service level they're used to.
- "Your competitor is cheaper." Acknowledge it. "There are cheaper options, and that may be right for some people. Here's what you get with us." Then name it: insured techs, a warranty, on-time arrival, cleanup.
- "I can't afford it." Offer a real option, like less frequent service, a smaller scope or a membership. Don't simply discount.
If someone leaves, let them go graciously. Leave the door open. Some come back after trying the cheaper option.
How do you know if the increase worked?
Watch a few numbers for two or three months after the change:
- Close rate on quotes. A small dip may be acceptable if margin per job is higher. A big drop means you went too far or explained it badly.
- Recurring customer cancellations. Compare with the same period last year.
- Gross margin. It should be back near your target.
- Revenue per job. It should be up.
If the numbers look good, set a reminder to review prices again next year. Small, regular increases are easier on everyone than a big jump after several years of no change.
FAQ
Should I raise prices every year? Reviewing every year is wise. Whether you raise depends on your costs and margins. Small, regular adjustments are usually easier for customers than rare, large ones.
Will I lose customers? Possibly a few. Many owners find the customers who leave over a modest, well-explained increase were the most price-focused ones. Track it rather than guessing.
Do I need to update quotes I've already sent? No. Honor quotes until they expire. That's one reason to put an expiry date on every quote.
Should I mention the increase on my website? Not usually. Recurring customers should hear it directly from you, and new customers just see current prices.
How ServFlo helps
ServFlo makes the mechanics of a price change simple. Update prices in your pricebook, or reprice markup items from new costs in one step with a preview first. Quotes and invoices already written keep their original prices, so nothing changes under a customer's feet. Members can get member prices on pricebook items, which gives customers a reason to join instead of leaving. For trade-specific pricing, see our guides to lawn care pricing and plumbing pricebooks, plus ServFlo's memberships and quotes and invoices.
Photo by Theme Photos on Unsplash.