Ditch Low Prices to Grow Your Shop Faster

Key Takeaways

• Raising prices by 10% can double your profit if your margins are thin, without adding a single new customer.
• Alex Hormozi admitted to failing on 9,000 ads before finding the winning formula for high-ticket offers.
• The IRS allows you to deduct marketing costs as business expenses, so test new pricing models with less risk.
• Stop charging by the hour and start charging for the specific problem you solve to escape the labor trap.

A husband and wife team in Scranton ran a small cleaning service with four employees. They stayed busy every day but had zero cash in the bank at the end of the month. They charged $30 an hour because that's what the neighbor charged. They were one broken vacuum away from missing payroll.

Alex Hormozi said on X that he has lost money on over 9,000 ads he personally wrote. This is a guy who runs companies making hundreds of millions. If he can fail that many times and still win, you can afford to mess up your pricing a few times while you find the sweet spot. The lesson for the Scranton cleaners was simple. They weren't bad at cleaning. They were bad at math. Most small business owners pick a price based on fear rather than their actual costs.

The Math of Charging More

If you run a print shop or a landscaping crew, your biggest fear is losing a customer because you raised prices by $50. But look at the numbers. If you sell a service for $500 and your costs are $450, you only keep $50. If you raise that price to $550, your profit doubles to $100. You could lose some of your customers and still make more money while doing less work. This is how you stop the cash flow leaks that kill most startups in the first year.

I remember talking to a plumber in Ohio who was terrified to charge more than $85 for a service call.

He was working 70 hours a week and felt like a failure. Once he realized his gas, insurance, and truck payments meant he was actually losing $5 every time he turned the key, he moved to a flat-rate model. He charged $175 for the same visit. He lost some cheap customers, but he finally had enough money to hire a helper from the local trade school.

Why Your Experience Costs Money

New owners think they're selling time. You aren't. You're selling a result. If it takes you 20 minutes to fix a furnace because you've 20 years of experience, the customer shouldn't pay less. They should pay more because you saved them four hours of waiting around. When you price based on time, you punish yourself for being good at your job. This is a trap that service shop owners fall into constantly during their first year.

The Federal Trade Commission (FTC) cares about price fixing and making sure you aren't colluding with competitors to soak the public. But as long as you're acting alone, you have the right to charge what the market will bear. If your phone is ringing off the hook, your price is too low. A healthy business usually sees some pushback on price. If 100% of people say 'yes' immediately, you're leaving money on the table that belongs in your retirement account or your kids' college fund.

Testing Without Losing the Farm

You don't have to change your prices for everyone at once. Start with the next three people who call for a quote. If you usually charge $1,000 for a deck stain, quote $1,300 for the next one. See what happens. Most owners are shocked when the customer just nods and signs the contract. You're often the only person worried about the extra $300. To the homeowner, they just want the job done right by someone who shows up on time.

Remember that the Small Business Administration (SBA) provides free counseling through SCORE to help you look at your profit and loss statements. You can sit down with a retired executive who has seen these cycles before. They'll almost always tell you the same thing. Your overhead is higher than you think, and your margins are thinner than they should be. Testing new prices is the fastest way to find out if you have a real business or just a stressful hobby.

Focus on the Big Wins

Don't waste time worrying about the price of paperclips. Focus on the one or two services that bring in the most check-clearing revenue. This is what Sahil Bloom calls focus strategy for a reason. If you try to be the cheapest guy in town, you'll eventually be out of business because someone younger and more desperate will work for even less. You cannot win a race to the bottom unless you're Walmart.

Alex Hormozi's admission about those 9,000 failed ads is a reminder that business is about volume and iteration. You try something. It fails. You try something else. Eventually, you find a price point that makes the stress worth it. If you're currently feeling burned out, it's rarely because you've too much work. It's usually because you aren't getting paid enough for the work you're already doing.

Pick your most popular service and raise the price by 15% for the next three customers.

Related free tool

Break-Even Calculator — Find the number of customers you need to stop losing money. Free, no signup to start.

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📋 Disclaimer

This article is for informational purposes only and does not constitute legal, tax, financial, or professional advice. Laws and regulations change frequently, and the information presented may not reflect the most current legal developments. Always consult with a qualified professional (CPA, attorney, financial advisor) before making business decisions based on this content. MyBizNerd may receive compensation through affiliate links, but this never influences our recommendations.

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