The quickest and easiest way to boost your profits

The quickest, easiest and probably the most satisfying way to increase your profits is to raise your prices. And it’s something you can do right this minute, and probably even faster if you’re an online business (Mrs EBG once increased hers on her blog and it took exactly 47 seconds, including changing the web-page and updating the back-end payment processor).

Why is it so profitable?

Well, I’ll show you.

Imagine you sell widgets. Each widget costs you £140 to buy, and there’s an associated cost of sale of £60, to take account of sales, marketing, advertising and all the other stuff you have to do to get your widgets out of the door.

And you sell them at £270, a £70 profit with a margin of 35%. That’s about average for most businesses in most industries.

Now, say you increase your prices by just 10%, so you’re now selling the same widgets for £297.

Your cost of sale is the same, so the extra £27 is pure profit. In  other words, you’re now making a profit of £97 rather than £70, an increase of 38.5%. I don’t know about you, but I reckon that’s a good deal.

OK, so now the Big Whine...

“But I’ll Lose All My Customers!”

But you won’t.

Really, you won’t.

You may lose one or two, possibly. I think it’s highly unlikely, but I’ll grant you it’s possible. 

But here’s the upside of losing their business:

The chances are, they were crap clients anyway. Price buyers usually are. They expect more for the little they pay, they’re really hard to please, they’re quick to complain and slow to pay. I confidently predict the biggest headaches your clients give you come from the ones who moan the most about price.

You can lose a lot of them and still make the same money for less work. Without going into the maths, you can afford to lose roughly a third of your sales and make the same amount of money. And it’s money you’ll be making more easily and from people who are nicer to deal with.

But this is all moot, because you won’t actually lose any. My local butcher asked me for some advice a while back, and I told him the same as I’ve just told you: increase your prices by 10%.

Oh my, you’d think I’d asked him to sacrifice his first-born or something.

But with some resistance he did it. Now, bear in mind this is a small town with probably 4 or 5 butchers on the high street, and competition from at least three large local supermarkets.

The result? One old widower who dropped in once a week for his pork chop asked if the price of pork had gone up. That. Was. It.

Another time I accidentally (truly) over-quoted a price for a sales letter by hitting the £-sign instead of the $-sign in my email, and the client took it without blinking. 

At the time the exchange rate was around 2:1, so I’d been undercharging my US clients by 50%.

So the question is... how much are YOU undercharging? It’s not a question of if but by how much? Because I guarantee you are.

Premium Prices Make a Statement

Rightly or wrongly, the price you charge says something about you, your products and your services. Cheap prices attract cheap buyers. And politically incorrect as it may be to say so, cheap buyers are the very Devil to deal with.

I remember vividly sitting up working late into the night for peanuts because I’d been an ass and responded in knee-jerk fashion to my client’s “your best price, please, Jon” exhortation. 

Fortunately I learned early that my best price was a high one; and, ironically, it’s your customers’ and clients’s best price, too.


Because if they pay a high price, they tend to commit more strongly to the buying-decision they made in the first place. For many businesses, including mine, that actually serves their interests better.

Actions for today: pick something, a product or service, and increase the price by 10%. Track results. If it works, keep it there and follow-suit with your other products and services. 

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  1. My dad-in-law worked in Japan in the 70s. He said an English friend set up a restaurant with fillet steak as the prime dish. He fucked up the exchange rate calculation and priced it at the yen equivalent of £100 instead of a tenner. And Japanese salarymen queued round the block to take clients out for the £100 steak…
    It’s only overpriced if nobody buys it, eh?

    1. Superb.
      Some years ago I put an old stereo out with a sign on it: “Free”.
      No one took it even though it was a good one and in good condition.
      So I changed the sign to £50. Some fucker took it within the hour (and didn’t pay a bean).