Pricing & Margin

You can afford to lose more volume than you think.

The fear of losing customers is almost always bigger than the actual loss.

The formula

Max acceptable volume loss = price increase ÷ (price increase + old margin).

Raise prices 10% on a 40% gross margin business, and you can lose 20% of your volume and make the same gross profit: 10 ÷ (10 + 40) = 20%. The breakeven is much higher than most owners assume.

By margin

Acceptable loss on a 10% increase.

25%

30% margin business

You can lose a quarter of your volume and still make the same gross profit.

20%

40% margin business

One in five customers can walk and the math still works.

17%

50% margin business

Even at strong margins, the loss tolerance is much higher than the fear.

How to roll it out

Raise the price. Keep the customers.

01
New estimates only
Apply the new pricing to every quote going out from a fixed date forward. Don’t reprice quotes already in the customer’s hands.
02
Grandfather recurring customers one cycle
Maintenance plans, annual contracts, recurring routes hold their rate for one renewal. Then they roll up.
03
Lead with new value
Faster response, better warranty, ISA Certified climbers (only if true). Never lead with “our costs went up.” Lead with what the customer gets.

In practice, properly communicated home service price increases see 0 to 5% volume loss. Well under the math’s breakeven.

The bottom line

Run the math. Then raise the price.

The customers who leave over a 10% increase weren’t the ones funding your business.