You’re Probably Charging Too Little (And Ignoring It)
Most businesses that know they’re undercharging carry on regardless. The price was set years ago, it hasn’t caused a walkout, and raising it feels like a confrontation nobody is ready for. So it quietly stays where it is, whilst inflation, rising supplier costs, and the extra hour you now spend on every client eat into what was never a fat margin to begin with.
The clearest signs you need to raise your prices
You’re winning nearly every piece of work you quote for. That sounds encouraging until you realise what it probably means: you’re the cheapest option, and price-sensitive clients are gravitating to you for exactly that reason, which isn’t the client base most businesses actually want to build. Charging too little compresses margins and can signal lower quality, and if you’re winning nearly every deal on price, you’re leaving money on the table.
Your costs have risen but your prices haven’t moved. Supplier invoices, software subscriptions, energy bills, payroll: it’s easy to focus on the cost of goods whilst forgetting that overhead creeps up too. If those costs have risen over two or three years and your prices haven’t, you’re effectively cutting your own pay in slow motion.
Your best clients keep telling you that you don’t charge enough. That one should be embarrassing, and it usually is. It means the people who understand the value of what you do have already done the maths on your behalf.
How to raise your prices without drama
Small, regular increases are far easier for clients to accept than a large jump every five years, which is what happens when businesses avoid the conversation for too long and then have to scramble to catch up. At a minimum, prices should be revisited annually. Even a 1% increase can lift net profit by around 12% on average, which is not a figure to scroll past.
Give clients 30 to 60 days’ notice, explain the reasoning plainly, and resist the urge to apologise at length. A straightforward note saying that your prices are changing, when, and by how much is genuinely sufficient for most established relationships. Four hedging paragraphs don’t make it easier; they just make it weirder.
If you have a mixed client base, it’s worth thinking about which services are most underpriced and starting there, rather than adjusting everything at once and giving people a reason to shop around.
The psychology of what low prices actually signal
There’s a widespread assumption that cheaper always means more appealing, but in many service categories, consultancy, design, legal, health, coaching, a suspiciously low price reads as a warning sign rather than a bargain. The market has absorbed enough dodgy-cheap experiences to be cautious. Set prices too low, and clients may quietly question whether you know what you’re doing.
Pricing is a message. And if the message you’re sending is “I’m not entirely sure I’m worth more than this,” your clients will take you at your word.
The businesses that wait longest to raise their prices tend to be the ones most anxious about losing clients, which is understandable. But the clients most likely to leave over a modest increase are usually the ones who take the most time, pay the latest, and push back the hardest on everything else. Losing them, whilst uncomfortable, is often quietly useful.
Frequently Asked Questions
How much should I raise my prices by?
There’s no universal figure, but a small annual increase in line with your rising costs is far better than a large, infrequent jump. Review your actual costs first, then look at what comparable businesses charge. Even a 5-10% increase, applied carefully to your most underpriced services, can meaningfully improve margins without triggering significant pushback from established clients.
What if I lose customers when I raise my prices?
Some businesses have built a base of clients willing to pay a premium; others attract bargain hunters who’d switch to save a small amount. A modest, well-communicated increase rarely loses you the former group, and losing the latter often improves your margins anyway.
Is there a good time of year to raise prices?
Timing does matter. Business clients are often more receptive at the start of a calendar or financial year, and raising prices just before a busy season can work well. Avoid doing it immediately after a service problem or during a period when a client is already under pressure.