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Reviewing Your Pricing
When you’re starting out, competing on price is a legitimate strategy. You need work, you need reviews, and you need to build your customer base.
Undercutting on price is a reasonable way to do that.
But once you’ve got momentum, that strategy starts working against you. You’ll run out of time for low-margin work, and you’ll find yourself busy but not profitable.
Is It Time to Increase Your Prices? How to Review Pricing for a Growing Business
Once you’ve got momentum, competing on price becomes a ceiling.
Here’s how to review your margins and charge what you’re actually worth.
Review your Gross Profit Margin
Gross Profit is your sales revenue minus the direct costs of delivering your product or service. Gross Margin is that number expressed as a percentage of revenue.
For example, a café’s direct costs include coffee beans and barista wages — not the power bill or the accountant out the back. Those are overheads.
If you’re not sure what margin you should be aiming for in your industry, ChatGPT or a quick conversation with your accountant is a good starting point.
The point of the exercise
Improving your margin means you make more money from the same amount of work. That extra profit can be reinvested into growing the business, or simply taken home. Either way, it’s a better outcome than staying busy and staying broke.