How to Decide When to Raise Your Prices
Most brands delay a necessary price increase and then make a large one, which is the worst of both options. Input costs move, and a price held too long erodes margin until the increase has to be big enough to be noticed. Here is how to approach it.
Why Delay Is the Common Error
This guide is for supplement, Ayurvedic and herbal brand owners in India.
Input costs drift upward: raw materials, packaging, freight, payment fees and shipping. Each increase individually seems too small to act on, and collectively they erode contribution until the product is barely profitable.
At that point the increase needed is large, which makes it conspicuous to customers and risky to implement. A series of modest adjustments would have been absorbed far more easily.
So the discipline is not to decide whether to raise prices but to review them on a schedule, so the question is asked before it becomes urgent.
What to Check Before Raising
Six things, in order.
- Recalculate full landed cost, including packaging, testing, freight, storage and wastage.
- Recalculate contribution per order after shipping, payment fees, returns and damage replacements.
- Check whether the real problem is cost or is actually return and damage rates, which may be fixable instead.
- Check your reorder rate, since a price increase on a product with weak reorders accelerates the loss rather than fixing it.
- Check competitor pricing honestly, including what specification they offer at that price.
- Check whether a pack size change achieves the same result more acceptably than a unit price increase.
Alternatives Worth Considering First
Not all margin problems need a price increase.
| Option | When It Fits |
|---|---|
| Reduce landed cost through volume | When demand supports a larger batch |
| Reduce packaging cost through shared components | When you have several SKUs |
| Reduce return and damage rates | When those costs are material |
| Change pack size | When a different duration suits customers anyway |
| Improve reorder rate | When retention is the real economic problem |
| Raise the price | When costs have genuinely risen and the above are exhausted |
| Reduce testing or documentation | Never; this is a deferred liability, not a saving |
The last row is worth stating explicitly. Reducing quality controls to protect margin converts a financial problem into a quality and compliance one.
How to Communicate It
Briefly and honestly, to existing customers.
Tell Existing Customers First
A short note to your list before the change lands is better received than a customer discovering it at reorder.
Give a Reason, Briefly
Rising input costs is a sufficient and honest reason. A long justification reads defensively.
Do Not Blame Quality Improvements You Did Not Make
Claiming an upgrade to justify a price rise is both dishonest and easily checked.
Honour Existing Commitments
If you have promised a price to distributors or subscribers, honour it through the stated period.
Avoid the common mistake of announcing an increase alongside claims of improved formulation unless you genuinely changed the formulation, in which case the specification change and stability work should be real.
What Usually Happens
Three observations worth knowing.
First, modest increases on products customers already reorder generate less reaction than brand owners expect. Customers who have decided a product works are less price sensitive than first-time buyers.
Second, the customers who object most loudly are frequently not the ones who reorder most. Weighting the decision to the loudest responses distorts it.
Third, if a modest increase does cause significant loss of reorders, that is information about how marginal the product’s value proposition was, which is worth knowing even though it is unwelcome.
Checklist
Before implementing.
- Recalculate landed cost and contribution per order.
- Check whether return and damage rates are the real cost driver.
- Check reorder rate before raising price.
- Exhaust volume, shared component and pack size options first.
- Never reduce testing or documentation to protect margin.
- Decide the increase size with a view to avoiding a repeat soon after.
- Notify existing customers briefly and honestly before it lands.
- Honour existing price commitments through their stated period.
- Update all channels, listings and distributor material together.
- Watch reorder rate for the following two months.
- Set a twice-yearly review so the next adjustment is smaller.
Need Accurate Cost Data to Decide?
Share your product and volume and our team will quote with product, packaging, testing and documentation itemised.
Frequently Asked Questions
Why is delaying a price increase a mistake?
Because input costs drift upward in increments too small to act on individually, eroding contribution until the increase needed is large and conspicuous. A series of modest adjustments is absorbed far more easily than one big one.
What should I check before raising prices?
Recalculated landed cost and contribution per order, whether return and damage rates are the real cost driver, your reorder rate, competitor pricing including their specification, and whether a pack size change achieves the same result.
What should I never do to protect margin?
Reduce testing or documentation. That is not a saving but a deferred liability, converting a financial problem into a quality and compliance one that costs considerably more to resolve.
How should I communicate an increase?
Briefly and honestly to existing customers before it lands, giving rising input costs as the reason. Do not claim a quality improvement you did not make, and honour any price commitments through their stated period.
What usually happens after a modest increase?
Less reaction than brand owners expect, because customers who have decided a product works are less price sensitive than first-time buyers. If a modest increase does cost significant reorders, that itself is useful information about the value proposition.