The real reason most small businesses undercharge.
It is almost never about the maths. People know, somewhere in the back of their mind, that their day rate or their job price is too low. They worked it out on a napkin three years ago, they got some customers, and the price just stayed there. Raising it felt risky. Confrontational, even.
What I have noticed across the businesses I have built and the founders I have worked with is that undercharging is usually a confidence problem dressed up as a market problem. The story is "the market won't bear it" when the real fear is "a customer might say no, and that will feel like rejection." Those are very different problems, and they have different solutions.
To be fair, sometimes the market genuinely is price-sensitive. A window cleaner in a village of retired people on fixed incomes is in a different situation from a joiner fitting kitchens for second-home owners in Whitstable. Context matters. But in most cases I see, the price could go up, and the business owner already knows it.
The signs your prices are probably too low.
You are almost never too full for new work. If you quote and almost everyone says yes immediately — no pause, no negotiation, no "I'll need to think about it" — that is not a sign of a great pitch. It is a sign the price felt like a relief to the customer. They were expecting more.
You are busy but not comfortable. This one is blunt, but if you are working five days a week and the profit at the end of the month still feels thin, the volume is not the problem. The margin is.
You resent certain jobs. This is a reliable signal I have learned to take seriously. When a business owner starts describing a customer or a type of work with mild dread, and the common thread is that it pays badly, that is the business telling them something. The resentment is the price being wrong.
Your rates have not moved in two years. National Living Wage went up in April 2025 to £12.21 an hour. Materials have not got cheaper. Fuel has not got cheaper. If your prices have sat still while your costs have not, the gap has to come from somewhere — and it is usually coming from your own time or your own pocket.
How much of a rise is reasonable?
There is no universal answer, but here is how I would think about it. If you have not raised prices in two years and inflation has run at roughly 4–5% a year over that period, a 10% rise is not bold — it is keeping pace. Customers who have been with you for a while understand this, even if they grumble a little.
If you are repositioning — moving from "cheap and available" to "good and worth waiting for" — the rise needs to be big enough to signal the change. A 5% nudge does not reposition anything. Something closer to 20–30% starts to say something different about the offer. That is a bigger conversation, and it usually needs changes to how you present the work, not just the number on the quote.
For most people reading this, I would suggest starting with a 10–15% rise on new work only, testing it for a month, and seeing what happens to enquiry volume and close rate. That is a low-risk experiment with real data attached.
How to tell your existing customers.
This is the bit most people dread, and it is usually much less fraught than they expect. The two mistakes I see most often are announcing it too far in advance (which gives customers time to shop around and work up a grievance) and apologising for it (which signals that you think the rise is unreasonable).
A straightforward note — by email, or in person if you have that kind of relationship — works well. Something like: "From [date], my rates will be moving to [new price]. I wanted to give you a bit of notice. As always, happy to talk through anything." That is it. No lengthy justification, no list of reasons, no sorry. A brief heads-up followed by carrying on as normal.
Customers who leave over a modest, well-communicated price rise are usually the ones who were already shopping on price alone. Honestly, losing a few of those often improves a business more than it hurts it — it frees up capacity for better-fit work.
New customers versus existing ones.
One practical approach is to raise prices on new enquiries first and leave existing customers on their current rate for one more cycle — a quarter, a season, whatever makes sense for the work. This means you are testing the new price in a low-stakes way. If the phone keeps ringing at the higher rate, you have your answer. Then you can bring existing customers up to the new rate at the next natural renewal or review point.
I have seen this work well for tradespeople and service businesses across East Kent. A plumber in Deal raised his call-out rate from £65 to £80 on new work, kept his existing regulars at £65 for three months, then moved everyone up with a single short message. He lost two customers. Both had been slow payers. Net result: slightly less work, noticeably better cash flow, and a lot less chasing.
When an online presence changes what you can charge.
This one catches people out. The same service, presented differently, commands a different price. A plasterer with a one-page website showing clean, finished work, a few Google reviews, and a professional email address can quote 10–15% above a plasterer with nothing online and a phone number on a Facebook post — and customers will accept it without question, because the perceived risk is lower.
If your prices are stuck partly because you feel you cannot justify more, it is worth asking whether the way your business presents itself is holding the price down. A quote from someone with a credible web presence feels more anchored than a quote arriving by text. If the presentation is not there yet, that is something worth fixing before or alongside the price rise, not after.
What to do if a customer says no.
Some will. That is fine. The right response is not to immediately back down — that trains customers to push back on price as a tactic, because it works. If someone says the new price does not work for them, you have a few honest options: hold the price and let them go, offer a reduced scope at the lower price, or (for long-standing relationships where you genuinely want to keep the work) have an honest conversation about what flexibility looks like. What you should not do is silently fold and invoice the old amount. That is worse than not raising it at all, because it tells you — and them — that the new price was not real.
Mind you, most of the time this conversation does not happen. Most customers, especially those who have been happy with your work, will accept a well-communicated rise from someone they trust. The worry before the conversation is almost always bigger than the conversation itself.
The longer game.
Pricing is not a one-time decision. The businesses I have seen get this right treat it as something they revisit every year as a matter of habit — like updating their Google Business Profile or checking their insurance. Not a crisis, not a big announcement. Just a regular part of running a business that does not quietly erode its own margins.
If you are on the fence about a rise right now, the question I would ask is: what is the cost of waiting another six months? Usually it is a specific number — six months of work billed at a rate you already know is too low. Put that figure in front of yourself and see if the conversation with customers still feels as daunting.