Many owners of engineering and technical firms suspect their prices are too low. What stops them is the fear that a price rise will send good customers to a competitor. This guide shows how to raise prices without losing customers: how to work out how much business you could lose and still be better off, which customers to start with, and how to word the conversation. Every step is something you can start this week.

Why a small price rise matters more than it looks

A price rise is the only change that drops straight to profit. If customers buy the same amount of work at a higher price, your costs don’t move, so every extra pound is profit.

Take a made-up firm, Example Engineering Ltd: £3m of sales, a 35% gross margin and £810,000 of overheads.

• Gross profit: £3m × 35% = £1,050,000
• Net profit: £1,050,000 − £810,000 = £240,000 (8% of sales)
• A 3% price rise on the same work: £3m × 3% = £90,000 extra
• New net profit: £240,000 + £90,000 = £330,000, a 37.5% increase

Three per cent is a small number to a customer. It’s more than a third more profit to the business.

Standing still isn’t free either. If your prices haven’t moved in two years, your costs almost certainly have. ONS figures put annual growth in regular pay across Great Britain at 3.5% for May to July 2026. For a firm whose biggest cost is engineers’ time, a price that stays flat is a price that falls in real terms every year.

How much business could you lose and still be better off?

This is the sum that takes the fear out of the decision. The rule of thumb:

Work you can lose and break even = price rise ÷ (gross margin + price rise)

For Example Engineering, with a 35% margin and a 3% rise: 3 ÷ (35 + 3) = 7.9%. It could lose almost one pound in every twelve of its work and still make the same gross profit as before. (Check: 92.1% of the old volume at the new prices is £2,846,000 of sales; direct costs fall to £1,796,000; gross profit stays at £1,050,000.)

Now run it the other way. A 3% discount needs 3 ÷ (35 − 3) = 9.4% more work just to stand still. Discounts cost more than most owners expect; price rises cost less.

One caution: the rule assumes your direct costs go down when you do less work. If your engineers are salaried and would sit idle, losing work hurts more, so be more careful with your busiest, highest-volume customers. Run the sum with your own margin before you decide.

Which customers to start with

A flat increase across every customer is the riskiest way to do it. Sort your customers first.

1. New customers and new quotes: start today

A new customer has never seen your old price. Put the new rates into every quote from this week. It costs nothing in goodwill and tells you quickly whether your win rate changes.

2. Customers you lose money on

Pull the gross margin by customer from your job costing or accounts for the last 12 months. Some customers will sit well below your average: heavy on variations, site visits, revisions or chasing. They need the biggest rise, or a change in what they get. If one of them leaves, you may be better off.

3. Customers on old rates

Long-standing customers are often the furthest behind, because nobody wanted to have the conversation. They also tend to value reliability and the people they know over a small saving elsewhere.

4. Your best, most profitable customers: go carefully

Raise their prices too, but by less, with more notice and in person. These are the ones to protect.

How to raise prices without losing customers: the conversation

How you tell customers matters as much as the number.

1. Check your contracts first. Some framework agreements fix rates for a period or set out how and when prices can change. Respect them. If you’re unsure what a contract allows, ask your solicitor.
2. Give clear notice. Thirty to sixty days lets customers budget and avoids the feeling of being ambushed. Never let the first sign of a rise be a higher invoice.
3. Tell your biggest customers yourself. A call or a meeting, followed by a short letter that confirms it.
4. Keep the letter short and plain. State the new rates, the date they apply from, and one honest reason. Don’t over-apologise or write three paragraphs of justification; it invites negotiation.
5. Offer a choice, not just a higher number. A customer who pushes back can keep the old price for a reduced scope: longer turnaround, fewer site visits, a set number of revisions, or standard rather than priority support. Many will choose to pay the new rate for the service they’re used to.
6. Brief your team. Project managers and engineers get asked “why has this gone up?” on site. Give them two sentences to say, and tell them who to pass questions to. Nobody should offer a discount on the spot.

A sample wording you can adapt:

“From 1 February our day rates and standard prices will increase by 4%. Our costs, mainly our engineers’ pay, have risen and we want to keep the same team and response times you’re used to. Work already quoted or ordered before that date stays at the current price. If you’d like to talk through the options, call me directly.”

Mistakes that lose customers

• Waiting years, then making one big jump. A 12% rise after four years of nothing is a shock. Small, regular reviews are easier for customers to accept and plan for.
• Giving it back straight away. If every customer who complains gets the old price, you’ve told them the rise was optional.
• Raising prices while service is slipping. If you’re behind on deliveries or reports, fix that first. A price rise lands badly on top of a complaint.
• Only looking at the rate card. Unbilled variations, free site visits and extra revisions are price cuts nobody agreed. Charging for them properly is often easier than changing your headline rate.

What to do this week

1. Work out your gross margin and run the break-even sum above for a 3%, 5% and 8% rise.
2. List your top 20 customers by sales with the gross margin on each, and mark the ones below average.
3. Put the new rates into every new quote from Monday.
4. Choose a date for existing customers, at least 30 days out, and draft the letter.
5. Add a yearly price review to your diary and a price review line to your standard terms for new work, so next time is routine. (Our guide to payment terms wording covers how to keep terms plain.)

Pricing behind costs is one of the leaks we look for in every review, alongside quoting, late payment and slow invoicing. You can see how a review works and what each of our services covers.

Find your own price gap

Our free leak calculator takes a few numbers and gives a rough estimate of your price gap, plus the cash held by late payers and slow invoicing. It takes about two minutes. If the figure is bigger than you’d like, book a free 30-minute call and we’ll talk through which customers and prices to look at first.