The Great Pricing Panic

But sooner or later, we always arrive at the dreaded conversation.

“We might have to raise prices.”

Cue the deep sighs. The nervous glances. The sheer, unadulterated fear that customers will flee at the first sight of a price increase. It’s a conversation business owners loathe, not because it’s hard to justify higher prices, but because they worry it will destroy everything they’ve built.

And yet, thanks to a fresh perspective from Peter Hill’s Pricing for Profit, I’m ready to reframe the conversation. Because, as it turns out, this isn’t really about the money.

What Really Sends Customers Running (Hint: It’s Not Price)

If raising prices was an automatic death sentence, the world’s most successful businesses would be the cheapest ones. And yet, look around: the companies with the most loyal customers—Apple, Waitrose, high-end consulting firms—charge a premium, and their customers stay.

Why? Because customers don’t actually make decisions based on price alone. They make decisions based on value.

Research shows that seven times more customers leave because they feel a business doesn’t care about them than because of price. That’s right—people are far more likely to abandon you because they think you’re indifferent, rather than because you increased your prices by 5%.

It’s why a café that remembers your name and your order can charge £3.50 for a coffee when there’s a £2.00 alternative down the road. It’s why customers will stay with a premium service provider even when a cheaper option exists. And it’s why slashing prices to ‘stay competitive’ often does nothing but undermine profitability—because the problem was never about price in the first place.

The Real Problem With Underpricing

Here’s where it gets even more interesting. Businesses that keep prices low to attract customers often end up with the worst ones.

Low-price customers are, generally speaking, the least loyal. They’re the ones who complain the most, expect the most for the least, and—ironically—are the most likely to leave when someone else undercuts you by a few pence.

Meanwhile, the customers who stick around when prices go up? They’re the ones who value service, consistency, and expertise. They’re the ones who know that good things cost money and are willing to pay for them.

So, How Do You Actually Raise Prices Without Losing Customers?

The key to increasing prices without losing customers isn’t about justification—it’s about communication.

✔ Focus on value, not cost. Instead of apologising for raising prices, explain how it allows you to maintain quality, improve service, or invest in better products.
✔ Look at your best customers, not your cheapest ones. The goal isn’t to retain people who only care about price; it’s to build a base of customers who appreciate what you do.
✔ Make the increase small but meaningful. Even a 2–3% increase can significantly boost profits without causing mass panic.

Final Thought: It’s Time to Charge What You’re Worth

If I’ve learned one thing from working with clients this year, it’s that the fear of raising prices is often worse than the reality. Most customers won’t blink at a modest increase—if they feel valued. And those that do? Well, they were probably the ones making your life difficult anyway.

So, stop stressing over losing customers to price changes. Your real job isn’t to be the cheapest option—it’s to be the best one.

This year, margins are getting thinner and thinner.

I’ve seen it across my clients’ businesses—costs creeping up, profit margins eroding, and the ever-present pressure to do something about it. So, we’ve done what any sensible business does in times like these: we’ve scoured the numbers, dissected expenses, and tried to shave off inefficiencies wherever possible.