Free tool · Price increase calculator
Price increase calculator: how many customers can you lose?
Put your prices up and some customers might go. This shows how many you could lose and still make the same profit, and what a discount really costs you.
Strictly private. The figures you type stay on your device. They are never sent to us or kept on our servers. The only details we hold are your name and email.
Your numbers
Use a typical sale, job or monthly fee. Use a minus number to see a discount, e.g. −10.
New price
£1,100
New margin
45.5%
Sales you can lose
20.0%
10 of 50 a month, same profit
Profit if nobody leaves
+£5,000
Extra gross profit a month
A 10% rise: you could lose 10 of your 50 sales a month and still make the same £20,000 gross profit. If nobody leaves, that's £5,000 more a month, £60,000 a year.
| Price change | Sales change to stand still |
|---|---|
| -20% | need 100% more |
| -10% | need 33% more |
| -5% | need 14% more |
| +5% | can lose 11% |
| +10% | can lose 20% |
| +15% | can lose 27% |
| +20% | can lose 33% |
Table at your margin (40%).
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How it works
How do you work out what a price increase does to profit?
Each sale makes a gross profit: the price minus what it costs to deliver. A price rise adds the whole increase to that profit, because the cost of delivering doesn't change. So each sale is worth more, and you can afford to make fewer of them.
Share of sales you need to keep = margin ÷ (margin + price change)At a 40% margin and a 10% rise: 0.40 ÷ (0.40 + 0.10) = 0.80. Keep 80% of your sales and you make exactly the same gross profit. Keep more than that and you are better off.
What does a discount really cost?
The same formula works backwards. A discount comes straight off the profit on every sale, so you need more sales just to stand still. At a 40% margin a 10% discount needs a third more sales; a 20% discount needs twice as many.
“Discounting is the easy way out.”
Dr Lewis Haydon, Mentor Business Podcast
When a team discounts by 5 or 10%, the overheads and the cost of delivering the work don't come down with it, which is why discounting quietly eats the money that should be paying the owner. Usually what's missing isn't a lower price, it's the sales skill. Instead of taking money off, give the customer the feeling they've got more: add something that's worth a lot to them and costs you little. More in how to improve sales skills.
A reference table at a 40% margin
| Price change | To make the same gross profit |
|---|---|
| -20% | You need 100% more sales |
| -10% | You need 33% more sales |
| -5% | You need 14% more sales |
| +5% | You can lose up to 11% of sales |
| +10% | You can lose up to 20% of sales |
| +15% | You can lose up to 27% of sales |
| +20% | You can lose up to 33% of sales |
Questions people ask
Do you keep my figures?
No. The sums run on your own device: the figures you type are never sent to us or kept on our servers, and they stay strictly private. To see your result you enter your name and email, and those are the only details we hold.
How do you calculate the effect of a price increase?
Work out the gross profit you make on each sale now, then the gross profit after the rise. Divide the first by the second and you get the share of today's sales you need to keep to make the same profit. At a 40% margin, a 10% price rise means you can lose up to 20% of your sales and still make the same gross profit.
How many customers can I lose if I raise my prices?
It depends on your margin. The lower your margin, the more customers you can afford to lose after a rise, because each sale becomes much more profitable. At a 30% margin a 10% rise lets you lose up to 25% of sales; at a 60% margin, up to about 14%.
How much more do I need to sell to cover a discount?
More than most owners expect. At a 40% margin, a 10% discount needs 33% more sales just to stand still, and a 20% discount needs double the sales. If your margin is lower than the discount, every discounted sale loses money.
Should I put my prices up?
If your costs have gone up and your prices haven't, your margin has already fallen, so you are effectively giving a discount you never decided to give. Test it on new customers first if you are nervous.
Does this work for a service business?
Yes. Use the price of a typical job or a month's fee, and your gross margin after the cost of delivering it (the people, subcontractors and materials it takes). The maths is the same for a product or a service.
Built by Dr Lewis Haydon, a business coach and mentor in Birmingham, UK, who owns and invests in businesses. Price is the first of his five levers for owners whose business has grown but whose pay hasn't; see also the profit margin calculator and how to pay yourself as a business owner.
Next step
Scared to put your prices up?
Bring your numbers to a 30-minute virtual coffee and leave with a straight answer on how much, how to say it, and who to test it on first.
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