The Real Problem Isn't the Price Increase I've watched this play out dozens of times with people I work with at ALIRA. A business owner sits across from me looking stressed. Their margins have been squeezed. Fuel costs are up. Wages are up. They know they need to raise prices, but they're terrified of losing customers. Here's what I think: they're asking the wrong question. The real problem isn't whether your customers will accept a price rise. They will. What they won't accept is feeling stupid for paying more. They won't accept being blindsided. And they absolutely won't accept paying more for the same value they got last year. Look at what's happening in the market right now. Farmers know their costs aren't coming back down anytime soon, and they're saying so publicly. Hospitality businesses are telling their customers they've hit a ceiling. The difference between a price rise that works and one that tanks your business comes down to one thing: communication. Why Your Customers Actually Expect This I think people underestimate how much their customers understand about cost pressures. They read the news. They see oil prices. They know their own energy bills have gone up. They're not naive. What they need from you is honesty. Not apologising. Not explaining away. Just straight talk about what's changed and why. I worked with a service business last year that raised prices by 12%. They lost two customers. Both of them came back within a month because they realised the price was actually fair. The owner had been clear about what drove the increase: specific cost rises, not arbitrary margin expansion. The customers respected that. The businesses that lose customers on price rises are usually the ones that sneak it in. A slightly higher invoice. No mention of it. Or worse, they apologise for it in a way that makes the customer doubt whether the increase is justified. Don't do that. Own it. The Timing Question Matters More Than You Think There's a window when price increases work better than others. You want to raise prices when you've delivered recent value. When a customer has just seen a tangible result from working with you. When they've just renewed or recommitted. Don't raise prices in the middle of a quiet period when the customer hasn't thought about you in months. They'll feel the rise without the context of what they get from you. I'm also more cautious about raising prices during periods of genuine economic uncertainty. Right now, with shipping still affected by geopolitical issues and mortgage rates keeping people on edge, customers are in survival mode. They're not thinking about value. They're thinking about cash. That's a harder sell. But here's the thing: if your costs have genuinely risen, waiting for perfect conditions might mean waiting forever. What you can do is time it to coincide with something positive. A new feature you've added. A service improvement. A renewal or contract anniversary. Give the customer something to anchor the rise to. How Much Can You Actually Raise? I don't believe in arbitrary percentage rules. A 5% rise might be fine for a software subscription but catastrophic for a hospitality business already operating on thin margins. What I do believe in is this: the more frequently you communicate with your customers, the more you can raise. A SaaS business that emails customers monthly can probably raise prices by 8-10% without major churn. A tradesperson who only talks to customers on invoice day might need to keep it to 3-4%. The relationship is your shock absorber. If you've built one, you have more room to move. If you haven't, you're exposed. I also think it's worth raising in smaller increments if you can. A 3% rise twice a year is easier to swallow than a 6% rise once. It feels normal, like inflation. A big jump feels like you've decided to make more money off them. What Actually Works First, tell them before the price takes effect. Not the day the new invoice arrives. Give them notice. Thirty days minimum. Sixty is better. This shows respect and gives you the chance to explain properly. Second, be specific about what's changed. Don't say "costs have risen". Say what's risen. "Our supplier costs have increased 18% due to supply chain disruption" is a fact. "We need to maintain quality" is an explanation. Together they make sense. Third, show what they get for the new price. If you've improved anything at all, now is when you mention it. A faster turnaround. Better support. New features. Something. Even small things count. Last, give them an out that isn't painful. If you're raising prices by more than 5%, consider a grace period where existing customers stay on the old rate for a few months. It costs you money but it preserves the relationship. I've seen businesses do this and actually strengthen loyalty because customers felt treated fairly. The Customers You'll Lose You will lose some customers. Accept that now. The ones you lose are usually not your best customers anyway. They're the ones who were always price-sensitive, never quite committed, always looking for a cheaper option. They were going to leave eventually. Raising prices just accelerates it. Your good customers, the ones who actually value what you do, will stay. Some might question it. That's fine. Answer the question honestly and move on. What to do this week Make a list of your top 10 customers and next to each one, write down the last positive interaction you had with them. If that was more than three months ago, you need to rebuild that relationship before raising prices. Send them something valuable this week, no ask attached. It doesn't have to be expensive, just thoughtful. Second, calculate exactly what your cost increase has been over the last six months. Not estimates. Real numbers. This becomes your talking point. You can't communicate confidently about a price rise if you don't know precisely what drove it. Third, draft the message you'll send to customers about the price rise. Read it aloud. If you sound apologetic or uncertain, rewrite it. You should sound like someone who's made a fair decision based on facts.