The false choice I've had this conversation dozens of times. Costs are up. Margins are squeezed. Something has to give. So the question becomes: do we cut what we offer, or do we ask customers to pay more? But that's the wrong question. It assumes you only have two levers, and it assumes you've already figured out what the real problem is. Most people haven't. Look at what's happening in the market right now. Airlines are doing both. They're cutting flights and raising fares. Universal Music is being valued at $64bn because the business model works, but it works on volume, on getting paid multiple times from the same content. Oil price swings are hitting everyone's margins differently depending on their structure. The point is: people are reacting to different pressures in different ways because their underlying problems aren't the same. Your problem probably isn't the same as theirs either. Start by knowing what's actually wrong Before you touch pricing or services, you need to diagnose. I use a simple framework with clients: Is this a revenue problem, a cost problem, or a capacity problem? They sound similar. They're not. Revenue problem: you're not selling enough. Your market's shrinking, or you're losing share, or your sales process is broken. Raising prices doesn't fix this. It makes it worse. Cutting services doesn't fix it either. You need to sell more of what you've got, or sell something different. Cost problem: your input costs have gone up faster than you can pass them on. This is what's hitting airlines right now with fuel. Here, you actually do have to choose. You can take the margin hit, raise prices and lose some customers, or find cheaper ways to deliver. Sometimes all three. Capacity problem: you're at the limit of what you can deliver with your current team, tools, or infrastructure. You're turning away work or delivering slower. This one's interesting because raising prices actually makes sense here. You're not doing it because you need the money. You're doing it to manage demand down to what you can handle. Which one are you actually dealing with? Why most businesses get this wrong People want a quick fix. Raising prices feels decisive. Cutting services feels like you're being realistic. But neither is a diagnosis. They're just reactions. I've seen people raise prices by 15% because they read an article about inflation, then lose 30% of their customers because the market didn't actually move. I've seen others cut services thinking they're being lean, when actually they just made their offering worse than their competitors' for the same price. The other thing that happens: you don't actually know your numbers well enough to decide. You think your margins are 20% when they're actually 12%. You think a specific service is costing you 8 hours a week when it's actually 20. You're making a choice based on guesses. That's how you end up in worse shape than when you started. What actually works Here's what I've seen move the needle. First, measure. Pull your last three months of invoices, your cost of delivery by service line or product, your customer acquisition cost, your retention rate. Don't estimate. Look at the actual numbers. You'll probably find something you didn't expect. Second, test before you commit. If you're thinking about raising prices, raise them for new customers first. See what happens to your conversion rate. You'll know in 30 days whether the market can bear it. Don't raise prices across the board on everyone all at once. If you're thinking about cutting services, be surgical. Cut the service that costs the most to deliver relative to what customers pay for it, not the one that's easiest to remove. And tell your customers you're doing it. Explain why. Most people respect honesty more than they respect pretending nothing changed. Third, look for the thing nobody's looking at. Usually it's not about price or services at all. It's about how you deliver. One client was spending 22 hours a week on admin for every 100 hours of billable work. We cut that to 8 hours. Same service, same price, but margins improved by 18%. They didn't need to raise prices or cut anything. They just needed to see what was actually happening. The framework to use Take 90 minutes this week. Build a decision matrix. List your options down the left side: keep things as they are, raise prices by 10%, raise prices by 15%, cut this service, cut that service, or whatever you're actually considering. Across the top, put the things that matter to your business: profit margin, customer retention, competitive position, your own stress levels, whatever. Score each option against each criterion. Be honest. You'll see which option actually serves your business best, not just which feels safest or easiest. If you're struggling to even define the criteria, use a SWOT analysis first. It forces you to think about what's actually working and what isn't before you start making changes. What to do this week Monday: Pull your actual numbers for the last three months. Cost of delivery by service or product line. Revenue by the same categories. Don't estimate. Look at what you actually charged and what you actually spent. One spreadsheet. That's it. Wednesday: Schedule 90 minutes with whoever helps you run the business. Not to make a decision yet. Just to talk through what the numbers are telling you. Is this a revenue problem, a cost problem, or a capacity problem? Once you know that, the answer to "raise prices or cut services" becomes obvious. Friday: If you're leaning towards a change, design one small test. New customer pricing. One service cut for new clients only. A process change that might save time. Test it for 30 days before you commit to anything permanent.