Any business owner knows the key to success is attracting and retaining customers. But, of course, prices are a major factor in this equation, and raising them can be risky.

After all, if your prices are too high, you risk losing customers to your competitors. But if your prices are too low, you may be unable to cover your costs or increase cash flow for small businesses. So how can you raise prices without scaring off customers?

The answer may vary depending on your business. This blog post will discuss a few scenarios and tips to help you raise prices without losing customers. Read on to learn more!

What Is a Typical Price Increase?

If you're considering raising prices, you're probably wondering how much is too much. Unfortunately, there's no easy answer to this question. A "typical" price increase will vary depending on several factors, including:

  • Your industry
  • The current market conditions
  • How much your costs have increased

In general, most businesses raise prices by a few percentage points.

Why Small Businesses Raise Prices

So why do small businesses raise prices? There are several reasons. Here are a few common ones:

To Stay in Business

In some cases, businesses raise prices to stay afloat. The increase is usually due to higher costs for goods or services, rent, or other operating expenses. If your costs have gone up, you may need to raise prices to continue running your business.

To Make a Profit

In other cases, businesses raise prices to make more money. For example, perhaps you're not making as much money as you'd like or need to raise funds for a new project. If you want to increase your profits, raising prices may be the way to do it.


If your competitors raise their prices, you may need to raise yours to competitive advantage pricing, particularly if your competitors have a significant pricing advantage.

When It is Time to Increase Prices - 3 Scenarios

Now that we've discussed why businesses raise prices, let's look at a few scenarios where you might want to raise prices on your products or services.

1. When You're Introducing a New Product or Service

If you're introducing a new product or service, you may want to raise prices, especially if your new offering is significantly better than your old one. For example, if you're a clothing company introducing a new line of high-end clothes, you'll probably want to raise prices.

2. When You're Making Changes to Your Business

If you make changes to your business, such as moving to a new location or expanding your product line, you may need to raise prices. These changes will likely increase your costs, and you'll need to pass along those costs to customers through higher prices.

3. When Costs Go Up

Finally, you may need to raise prices if your costs go up. These costs include increases in raw materials, rent, utilities, etc. As a result, you'll need to raise prices to maintain your profit margin if your costs go up.

What Are Acceptable Reasons to Increase Prices

Studies have shown that customers are more likely to accept price increases if they're due to factors beyond your control. Such factors include:


One of the most common and acceptable reasons for price increases is inflation, which refers to the overall increase in prices for goods and services. Various factors, such as transportation costs or simply a higher demand for goods and services, can contribute to inflation.

Cost of Living

Another reason for price increases is the cost of living, which measures how much money is needed to maintain a certain standard of living. Cost of living can also be affected by inflation and other factors such as job loss or unexpected medical expenses.

Government Regulation

Finally, government regulation can also cause prices to increase. For example, if the government imposes a new tax on companies, they may pass that cost on to consumers through higher prices.

How Companies Raise Prices without Raising Prices

There are a few ways that companies raise prices without actually raising prices. Here are a few standard methods:

Add New Features or Benefits

One way that companies can raise prices without raising prices is by adding new features or benefits. For instance, if a company raises the price of its flagship product, it can offset the increase by adding new features that justify the higher price.

Or, if a customer is reluctant to pay more for a product, the company can offer free shipping or a gift with the purchase. Companies can sometimes convince customers to accept a higher price by offering more value.

Redesigning Products

A company might change a product's packaging or add a new flavor or scent. These changes might seem minor, but they often convince customers to pay more for the same product.

Offering Discounts or Coupons

Customers are often more willing to accept a higher price if they feel they're getting a good deal. So, companies might offer discounts or coupons.

For example, a company might offer a 10% discount to customers who purchase a certain amount of their product. Such a discount encourages customers to buy more of the product, which raises the company's profits.

How to Tell Customers about Price Increase Example Of 2022

Telling your customers about a price increase can be difficult. Still, it's essential to do it in a way that doesn't alienate them. Here are a few tips:

Be Upfront

The best way to tell customers about a price increase is to be upfront about it. Don't try to hide the price increase or bury it in the fine print. Customers will appreciate your honesty, and it will help build trust.

Give Advance Notice

Whenever possible, give your customers advance notice of a price increase. Doing so will give them time to budget for the higher prices.

Offer a Discount

If you must raise prices, offer a discount to soften the blow. A discount will show your customers that you're still committed to giving them a good deal.

Explain the Reason for the Increase

Be sure to explain the reason for the price increase. Your customers will be more understanding if they know why the price increased.

Bottom Line

Raising prices can be a difficult decision for any business. Still, there are ways to do it without scaring off customers.

The key is to be upfront about the price increase, give advance notice whenever possible, and offer a discount to soften the blow. Customers will be more understanding if they know that the price increase is due to factors beyond your control.

By following these tips, you can raise prices without losing customers.

About the Author, James Webster

James Webster, founder and Executive Chairman of ROK Financial has almost two decades of experience within the financial services industry. His passion for helping small business owners and his innovative way of thinking, has allowed him to run multiple successful businesses including National Business Capital & Services. Under the National name, the team was able to help secure over $1 Billion in financing for small businesses nationwide.