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Should I Put My Prices Up?
See what different price rises could mean for revenue, and how far job numbers could fall before revenue drops back. Use your own numbers and get your answer straight away.
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BuzzBrain TimeBoost works out the true cost of each job before you quote, keeps quotes moving and shows what each job actually made. Free during private beta testing on iPhone and iPad.
See BuzzBrain TimeBoost →How it's worked out
The calculator turns your average price and job numbers into a yearly figure, then applies each price rise. Everything is ex-GST.
- Jobs per yearJobs per week × working weeks, or jobs per month × 12
- Current yearly revenueCurrent price × jobs per year
- New priceCurrent price × (1 + increase %)
- Revenue at the same job numbersNew price × jobs per year
- Jobs needed to match current revenueCurrent revenue ÷ new price
- Drop in jobs before revenue falls below current1 − current price ÷ new price (same as increase ÷ (1 + increase))
- Contribution (optional)(Price − cost per job) × jobs per year, with the cost per job kept the same
A 10% price rise does not mean you can lose 10% of jobs. Revenue only breaks even if job numbers fall by about 9.09% (0.10 ÷ 1.10).
Worked example
A handyman business charges an average of $380 a job (ex-GST), does about 15 jobs a week over 48 working weeks, and each job costs about $190 in direct costs. They look at a 10% price rise.
| Average price | $380 |
|---|---|
| Jobs per week | 15 |
| Working weeks | 48 |
| Cost per job | $190 |
| Price rise | 10% |
| Current yearly revenue | $273,600 |
|---|---|
| New price | $418 |
| Revenue at the same job numbers | $300,960 |
| Drop in jobs before revenue falls below current | 9.1% |
| Drop in jobs before contribution falls below current | 16.7% |
Revenue breaks even if jobs fall by about 1.4 a week. Because each job has a $190 cost, contribution could handle a bigger drop, but that still isn't profit after overheads.
Assumptions
- Nobody can predict how customers will respond. Break-even figures are maths, not predictions.
- 'Same job numbers' scenarios assume the number of jobs doesn't change.
- Revenue is not profit. Fixed overheads, wages not in your per-job cost, and tax aren't included.
- If you enter a cost per job, it's assumed to stay the same in every scenario. Change it yourself to test rising costs.
- All prices are ex-GST. The incl.-GST price only matters if you're registered for GST.
- Averages simplify reality: your jobs vary in size, and a price change may affect them differently.
This calculator shows the maths of price-rise scenarios based only on the figures you enter. It doesn't predict how customers will respond and isn't financial advice.
FAQ
Price Increase questions. Answered.
If I raise prices 10%, can I lose 10% of customers and be no worse off?
No. At a 10% rise, revenue falls below current if job numbers drop by more than about 9.09%, because each remaining job is only worth 1.1 times the old price. The formula is increase ÷ (1 + increase).
Will I lose customers if I put my prices up?
Nobody can say for sure. It depends on your market, your customers and how you communicate the change. This calculator shows the maths of different scenarios; it doesn't predict behaviour.
Does more revenue mean more profit?
Not necessarily. Revenue is what you charge. Profit depends on your costs, overheads and tax, which this calculator only partly reflects if you enter a cost per job.
What is contribution?
Contribution is the price minus the per-job cost you enter. It's what each job leaves over to help pay overheads and tax. It isn't net profit.
Should I use prices including or excluding GST?
Excluding GST. GST goes to the ATO, so it isn't revenue. The incl.-GST price is shown only as the price a customer would see if you're registered for GST.
Which price rise should I choose?
The calculator doesn't recommend one. It shows each scenario the same way so you can compare them against what you know about your costs and customers.
Your next step
BuzzBrain TimeBoost
BuzzBrain TimeBoost works out the true cost of each job before you quote, keeps quotes moving and shows what each job actually made. Free during private beta testing on iPhone and iPad.
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