Guide
What a small price increase does to your profit
Many owners would rather work harder than raise prices. Yet price is usually the most powerful lever in a business, because a price rise lands almost entirely as profit.
Why 1% on price is more than 1% of profit
A price rise adds revenue without adding cost. If you sell 100,000 a month and keep 10,000 as profit, a 1% price rise adds 1,000 a month, all of it profit. Profit goes from 10,000 to 11,000: a 10% increase from a 1% price change.
Compare it with cutting costs
Cutting 1% of costs in the same business saves 900 a month, which is good, but less, and cost cuts are often harder to find and to keep. The two levers work best together.
How to raise prices well
- Raise for new customers first and learn how they respond
- Give existing customers notice and a clear reason
- Add value where you can: faster delivery, better terms, a clearer offer
- Review prices every year, in small steps, rather than rarely and sharply
- Watch which customers leave: sometimes they were your least profitable
See it on your own figures
Every Big4CFO report shows what 1% on price, 1% off costs and faster collection are worth on your own figures, and the Excel workbook lets you change the percentages and see the result.
Have it worked out on your own figures
Big4CFO checks your books to the cent and produces this every month, from your own records. One-time reports cost $49 (one month), $99 (three months) or $199 (twelve months). Monthly plans start at $349 a month (Foundational), with Growth at $599, Leverage at $899 and Capital Stack at $1,999.
Questions
- Will I lose customers?
- Some may leave; often fewer than feared, and the ones most sensitive to price are frequently the least profitable. Test with a small rise first.
See it on your own figures
One-time reports from $49, delivered within minutes. Monthly plans from $349. Every payment carries a 14-day money-back guarantee.