How much you need to raise it, not whether you should raise it
By the end you'll have the new price calculated from what it costs you today to deliver the service, not a rough guess, plus the formula to repeat it for every service in your lineup.
By Yodai · Published September 6, 2026 · Updated October 12, 2026
You know you need to raise your price. You've spent months noticing that by the end of the week there's less left than there should be, and yet, when you sit down to write the new number, your mind goes blank. You bump it up two dollars because it sounds reasonable. Or five, because it's a round number and it's easier to type into the service listing than to actually run the math.
The problem isn't the increase itself. It's that the number doesn't come from anywhere: it doesn't come from a calculation, it comes from a gut feeling. And a gut feeling won't tell you whether it's enough, or whether in six months you'll be right back where you started, wondering again how much to raise it.
What's gone up isn't a whim to charge more, it's what it costs you to deliver it
The price you set the first time came from a calculation, even if you never wrote it down: how long the service takes, how much it costs you to deliver, how much you want to earn per hour of work. That calculation had a result, a margin: what's left over after covering the cost.
What's happened since you set that price is that the numbers in that calculation have crept up on their own, materials, gas, rent, maybe even your own hourly rate if you've gained more experience, and the margin has been quietly eaten away without you deciding anything.
So the right question isn't how much do I raise it. It's how much does today's version of what used to cost less actually cost, and what price do I need to get back the margin I had when I first set it. The same formula works whether you sell haircuts, embroidered t-shirts, or private lessons: what changes is what you plug into the cost, not the math itself.
- 1Write down what it cost you back then
When you set the price, how much you spent on materials, travel, and your own time for each service. If you never wrote it down, rebuild it from memory: it's an estimate, not an accounting statement. - 2Calculate what it costs you today
The same categories, with today's prices: what you pay now for materials, gas, rent if you have it. Add in your time too, valued at what you want to charge yourself per hour now, not what you charged a year ago. - 3Compare the two margins
Margin is the pretax price minus cost, divided by that price. If it was 44% of the price back then and it's 26% today, now you have the problem measured in a number, not just a feeling that something's off. - 4Raise it to your usual margin, not to a number that just sounds good
The new price is whatever it takes for today's cost to go back to representing the same percentage it did when you first set it. You'll see the exact math in the example below.
This isn't a calculation you do once and forget. Do it again whenever one of these numbers moves in a clear way: rent goes up, your supplier changes their rates, you decide your hour is worth more. You don't need to repeat it every month; reviewing it once a year, or as soon as you notice the margin has shifted, is enough.
A case with numbers
A hairstylist who does house-call haircuts set her price at $25 a year ago. Throughout this example, all the numbers are before sales tax, because sales tax isn't your money, you collect it for the state. Her math back then was: $3 in gas, $2 in product, and 45 minutes of her time valued at $12 an hour, which comes to $9. Total cost: $14. Margin: $11, 44% of the price.
Today gas runs her $4.50, product costs $2.80, and she's decided her hour is worth $15; she works just as fast, still taking 45 minutes, so her time costs $11.25. Today's total cost is $18.55. With the old $25 price, the margin has dropped to $6.45: 26% instead of 44%.
To get back to a 44% margin with today's cost, here's the math: price equals cost divided by one minus your target margin. $18.55 divided by 0.56 is $33.13. That's the number, not $28 because it feels reasonable or $30 because it's round: $33 is what it takes for the business to earn, proportionally, the same as it did when it first set the price. One catch: that price doesn't include sales tax. If you're selling to individual customers, the price you show them has to be the final one, tax included. Depending on your state's rate, that $33.13 could end up closer to $35 or $36 on the receipt.
If the result makes you uneasy because it seems like a lot, that unease is well placed: it's telling you how long you've been working with a margin that's been shrinking without you ever deciding it should.
The same problem across a menu with two different services
The same hairstylist also does gel manicures at clients' homes. She priced it a year ago at $18: $6 in materials, gel polish, file, cotton pads, and 30 minutes of her time at the same $12 an hour, $6. Cost: $12. Margin: $6, 33%.
Today the gel polish supplies cost her $9, half again what they cost before, and her time, at $15 an hour, comes to $7.50. Today's cost: $16.50. At the old price of $18, the margin is $1.50: 8%. It's dropped much more than the haircut's margin did.
To get back to a 33% margin with today's cost, she needs to charge $24.63: a 37% increase, compared to the 33% increase the haircut needs. It's not the same increase because there are really two different businesses inside the same business: in the haircut, your time matters more, and that's gone up 25%; in the manicure, supplies matter more, and those have gone up 50%.
With this number, you've already done the hardest part: you know how much, not just that you needed to raise it. Put it on each service's listing on your website, tax included if you sell to individual customers, on the date you set for the change: until that day, whatever the website shows is what a customer booking can hold you to.
What you decide to do about the clients who already buy from you today, whether you honor the old price for a while or raise it the same as everyone else, is the next decision, and it has its own logic.
- You now have the real cost of delivering your service today, compared with what it was when you set the price.
- You have the formula to calculate the new price: price equals today's cost divided by one minus the margin you want to recover.
- You know the calculation needs to happen service by service, because costs haven't gone up the same for all of them.
Check that you've got it
Answer before opening each one. If one gives you trouble, go back to the section that explains it.
1. You set the price for a service two years ago and never wrote down the math at the time. Can you still do this calculation?
Yes: rebuild what it cost back then from what you remember, materials, travel, your hourly rate at what you charged for your time then, even if it's approximate. What matters is comparing that margin to today's, not having an exact set of books.
2. You work out that you need to raise a service by 37%, and that feels like too much to tell the customer. Do you round the number down so it sounds better?
Not if the math is right: if your margin has dropped from 33% to 8%, 37% is what it takes to get it back, and rounding down to a number that sounds better only puts off the problem until the next increase. How you tell the customer is a separate decision, how much is not.
3. You have three services on your menu and only had time to run the numbers on one. Do you raise the other two by the same percentage to keep things simple?
No: each service splits differently between materials and time, and materials haven't gotten more expensive by the same amount across the board. Raise each one with the same formula, today's cost divided by one minus the margin you want, even if that means doing the math three times instead of once.
Once you have the formula, you have the number. What you still need to decide is what price applies to a customer who's already been buying from you for months: whether they pay what new customers pay or keep their old rate, and for how long.
NextFor your existing customers: old price or new price?