Pricing is a decision, not a spreadsheet

Open a spreadsheet of your pricing and you will usually find two things: a number that was set some years ago, and a column of costs that has moved a great deal since. The gap between those two facts is the entire problem, and it is almost never solved by multiplying by 1.1.

Cost to serve is the missing column

Price covers more than the hours. It has to cover the hours, the tools, the rework, the support requests that arrive free, and the management attention the delivery consumes. Most pricing models account for the first two and quietly ignore the rest.

Build the missing column for three of your most common offerings. For each, list every direct cost, then add an allocation of overhead based on a defensible driver — headcount, machine time, or revenue share, and choose one rather than blending them. The number that results will usually be uncomfortable, which is a sign that it is probably right.

Customers are not segments

The second error is treating a discount policy as a pricing strategy. If the largest accounts receive the deepest discount, the business has quietly decided that scale is more valuable than margin, and it is almost never a decision anyone made consciously.

Segment by what the work actually costs to deliver, not by how large the customer is. Two clients of equal size can have completely different cost profiles depending on how much customisation they absorb, how often they change scope, and how much unpaid support they consume.

What to actually do

Raise prices only where you have a specific reason, and state the reason. New customers get current pricing without grandfathering. Existing customers get a notice period rather than an immediate change. The smallest, best-populated segment gets the first test.

Then watch the volume response for a quarter before touching the next segment. Pricing is the one variable in a business where being wrong is immediately visible, and the visibility is the point — it is how you find out.