Is It Time to Raise Your Prices? Do the Math Before You Decide
Angela owns a hair salon and hasn’t changed her price list in almost three years, even as product costs, rent, and wages have all crept up around her. She’s not sure if she’s still making real money on her most popular service or just staying busy while margin quietly disappears.
That uncertainty is common, and it’s fixable with about twenty minutes of honest math.
Calculate true cost first, not last
Most pricing decisions start with “what do competitors charge” instead of “what does this actually cost us.” True cost includes materials, direct labor time, an allocated share of overhead, and payment processing fees, not just the obvious line items. Owners are frequently surprised by how much overhead belongs in that number once it’s actually calculated.
Look at margin across the whole lineup, side by side
Once true cost is known for each product or service, price minus cost shows the real margin, in dollars and as a percentage. Lined up together, it’s common to find one service quietly subsidizing another, or worse, something priced below what it actually costs to deliver.
Test the scenario before committing to it
A 5% or 10% price increase has a real, calculable effect on margin. What it does to volume is harder to know for certain, but it’s worth asking a few honest questions first: when did prices last move, has cost gone up since then, and is the real problem price or is it cost creep nobody’s tracked?
Decide, communicate, then watch both numbers
A margin review that doesn’t lead to an actual decision is just an interesting spreadsheet. Once a change is made, track margin and volume together for 60 to 90 days. A margin gain paired with a small, expected volume dip is usually a win. A margin gain paired with a volume collapse is a sign to look again.
Want the full workbook? Download the free Soundview Pricing & Margin Review Workbook, with a true-cost worksheet, a margin comparison table, price-scenario testing, and an action plan.
Soundview Marketing Group helps Long Island businesses build the demand that makes a price reflecting true value stick.