Glossary / Price Increase Impact
Price Increase Impact
A price increase raises revenue on every sale without costing anything to acquire. Because the extra money is pure margin, you can afford to lose some customers and still come out ahead.
Work out yours
Break-even customer loss = increase ÷ (gross margin + increase)
20.0%
You could lose up to 20.0% of customers at this price and still make the same profit.
Why it matters
Owners avoid raising prices because they picture losing customers, but they almost never work out how many they could afford to lose. On forty percent margins a ten percent increase means you break even even if one customer in five walks, and most do not.
Where people get it wrong
Raise the price and the perceived value together. A price increase with no visible change reads as a penalty. The same increase alongside better packaging reads as an upgrade.
If this number is not where you want it
Price is a positioning outcome. What you sell has to look like it is worth more before anyone agrees to pay more, and that is a brand and packaging job.
Brand Identity, from $500
See what it would take, free →About Brand IdentityRelated terms
- Gross MarginGross margin is the share of revenue left after the direct cost of delivering the work.
- Average TicketAverage ticket is what a typical customer or job brings in before costs.
- Churn RateChurn rate is the share of customers who stop buying from you over a period.
- Customer Lifetime Value (LTV)Customer lifetime value is everything one customer pays you across the whole relationship, not just the first sale.
Common questions
+ How much can I raise prices without losing customers?
Increases under ten percent rarely cause meaningful loss for established relationships. The calculator above shows exactly how much loss you could absorb before it costs you.
Part of the small business glossary. All six free calculators are here.