Signs your prices are too low
- Your cost of sales is above the ATO range for your industry while your suppliers are already competitive.
- Wages rose with the award in July and your prices did not.
- You are fully booked or always busy, and still not making money.
- You have not changed prices in more than a year.
- Customers rarely question a quote.
What a price rise is worth
Take a business with $500,000 of sales, a 35% cost of sales and $300,000 of wages, rent and other costs. Gross margin is $325,000; less $300,000 leaves $25,000 of profit.
- A 5% price rise with no lost customers adds $25,000 of sales with no extra cost: profit doubles to $50,000.
- To make the same $25,000 from more volume at the old price, you would need about $38,500 more sales (each extra dollar carries 35 cents of cost), almost 8% more customers, and more again once the extra wages are counted.
- Even if the price rise loses 5% of customers, profit is still about $32,500: you would have to lose about 7% of your customers before the rise stopped paying.
That asymmetry is why pricing is usually the biggest single lever in a health check, and why it is the last thing to try when the margin is already in range.
See where your business sits, from your bank statement
Upload a CSV or PDF of your business bank account (3 to 12 months). The health check rebuilds what you really earn, compares each cost with businesses like yours, and shows where money is leaking and who owes you. Free to run: you see how much is at stake before you pay anything.
Any bank, any currency. The file is read once and not kept. Full report from $149.
How to raise prices without losing good customers
- Raise on a fixed date each year, such as 1 July when wages rise, so it is routine rather than a surprise.
- Raise the items people do not compare. Add-ons, extras and less common services are less price sensitive than your headline item.
- Give notice to regular and contract customers, with a reason: wages, rent, materials.
- Change the offer where you can: bundles, minimum call-out fees, a surcharge for weekends or urgent work.
- Watch the next three months of sales by customer type, not just the total.
If the price you would need is far above what the market pays, the problem is cost or location, not price. That is a decision worth testing properly in a feasibility study before you make it.