Pricing is the highest-leverage decision most businesses make. Most businesses underprice — sometimes by 30-50%. Raising prices rarely produces proportional customer loss; usually produces dramatic profit improvement with smaller customer attrition than expected.
Why most businesses underprice
Anxiety about losing customers. Comparison to competitors (race to bottom). Lack of testing actual price sensitivity. Founder discomfort with charging 'too much'. Compounding effect over years — initial low price never gets recalibrated.
How to test pricing without risking the business
Raise prices for new customers only first. Existing customer prices grandfather for 6-12 months. Test specific price points (£50, £75, £100) on similar offerings. Track conversion rate at each price. Often raising prices 30% loses 10% of customers — net profit improves dramatically.
Most businesses should pilot a price increase. The customers you keep at higher prices are usually better customers (less price-sensitive, more committed, less demanding). The pricing test is one of the highest-ROI exercises in business.