How often should I raise prices?
Short answer
Every year, automatically, at least three percent. More if costs jumped.
Why every year
A scheduled annual increase is normal. Customers expect it from utilities, insurance, and groceries. The shops that 'never raise prices' actually do, they just do it once every five years with a 30 percent jump that scares everyone.
The number
Three percent is the inflation floor. Five to seven percent is healthy if your costs went up or your value is higher than it was a year ago. Tell customers in writing 30 days ahead.
When a customer pushes back on the increase
Use it on the phone, once. Do not negotiate against yourself.
Customer
“Your prices went up again.”
You
“They did, about three percent. That is the first change in a year, and it keeps us able to do the work the way you expect.”
Customer
“That is a lot right now.”
You
“I hear you. The rate is the rate, but let's look at scheduling and scope so the total works for you. What is the number you are trying to stay under?”
Do not say
- “For you, I'll keep the old price.”
- “I'm sorry, I know it's expensive.”
- “Corporate made me do it.”
What a three percent increase is actually worth
Plug in your own revenue. The point is that a small increase drops almost entirely to the bottom line, because your costs did not move.
| Annual revenue | $600,000 |
|---|---|
| Three percent increaseNew revenue, same customers, same work | $18,000 |
| Added cost to deliver itYou are charging more for work you already do | $0 |
| Effect on net profit | +$18,000 |
| Customers you can afford to loseBelow that, you still come out ahead on profit | About 3 percent |
The math: Revenue times the increase percent equals new gross profit, because the cost of delivering the same work did not change. Then ask how many customers would have to leave before that gain disappears.
The 30-day price increase notice
Email or mail this. Short, no apology, no long explanation.
Subject: A small price change starting [DATE] Hi [NAME], Starting [DATE], our rates are going up about [3]%. On a typical job for you, that is roughly [$X] more than last year. Nothing about how we work with you changes. Parts, labor, and insurance costs have moved, and this keeps us able to show up on time, stand behind the work, and keep the same people you have gotten used to. Anything already scheduled or quoted before [DATE] stays at the old price. Thanks for the business. It matters more than you know. [YOUR NAME] [BUSINESS NAME]
Where owners get this wrong
- Waiting five years and then raising 30 percent at once. That is the increase customers actually leave over.
- Announcing the increase and then quietly honoring the old price for anyone who complains. Your best customers end up subsidizing the loudest ones.
- Raising the labor rate but never touching the parts matrix, service fees, or minimum charge.
Ask your version of this question
This is one business owner-tested take. Your shop size, trade, and team change the answer. Ask the exact version inside Ask a Shop Owner and get a response grounded in how owners like you actually handled it.
Now run it against your numbers.
This answer is written for shops in general. Inside Ask a Shop Owner it becomes your answer: your revenue, your crew, your market, your history. Ask "How often should I raise prices" and get the version that accounts for what you already told us.
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