The maths of a price rise (and why you keep not doing one)

Every owner we meet is carrying a price rise they haven’t done. The reasons are always the same — “our customers will leave”, “it’s a bad time”, “we’ll do it after summer” — and the arithmetic is always on the other side of the argument.

The number that matters: contribution, not turnover

Say you turn over £1m at a 30% gross margin. That’s £300k of contribution to pay overheads and profit. Put prices up 8% and change nothing else, and your contribution rises to £380k — because every pound of the increase is margin. That’s a 27% jump in gross profit from an 8% ticket move.

Now stress-test the fear. Suppose the rise loses you customers. How much business can you afford to lose before the rise stops paying? Divide the margin gain by the new margin rate: you could lose roughly one pound of sales in five and still be no worse off. In fourteen years of coaching, we have never — not once — seen a well-communicated single-digit rise lose anything close to that.

Why it doesn’t happen

Because the owner is guessing at the downside and not calculating the upside. Fear is specific (“Barry will go elsewhere”) while the gain is abstract. So we make the gain specific: run your own numbers through our Profit Levers calculator and put a pound figure on the rise before you decide Barry’s feelings are worth more.

How to actually do it

Write to customers, don’t announce vaguely. Give a date three to six weeks out. Give a reason in one sentence — costs, wages, investment — and stop explaining. Price the loyal slightly gentler than the new if you must, but move everyone. Then hold your nerve for a fortnight: the pushback window is short, loud, and almost entirely bluff.

One of our trades clients ran exactly this play — an 8% rise, scripted, sent on a Tuesday. Fourteen months later it accounted for the larger share of £94k in new net profit. Nobody left. The full story is in the Padley Heating climb log.

Figures simplified for illustration; run your own margin before you move. Better still, bring your last year-end to a free Survey Session and we’ll run it with you.