The short answer: Don't raise prices in your first 90 days. Use that window to learn the business, the customers, the costs, the competition, and to build goodwill. Most owners wait 3 to 6 months before adjusting price. When you do move, test on a subset first, keep the first increase modest, give notice, and tie it to value, not to new ownership. Raising prices can be your single biggest profit lever because it flows straight to the bottom line, but only if you do it deliberately, with data, once you've earned the right.
Why to wait
Every new owner spots "underpriced" items and itches to fix them. Resist it for one quarter. In your first weeks you don't yet know why a price is where it is, maybe it's a loss leader that drives the real money, maybe it's a promise to a key account, maybe the low price is the whole reason a customer is loyal. Change it blind and you can break a relationship you paid for. Waiting also does two things: it lets you gather real cost and competitor data, and it builds the trust that makes an eventual increase land softly instead of feeling like the new owner's cash grab.
A price increase from a stranger feels like greed. The same increase from an owner customers trust feels like business.
Never raise prices to plug a cash crunch
If month one feels tight, that's a working-capital problem, not a pricing problem, solve it with a cushion, not a panicked hike that alienates customers right when you need them most.
Are your prices actually too low?
Wanting more margin isn't evidence. Look for real signals before you decide there's room:
- Prices frozen for years. If the seller hadn't raised prices in three, five, or ten years while costs climbed, you're likely well behind.
- Margins below industry norms. Compare your gross margin to typical figures for the sector on the industry data.
- Zero pushback. If every quote gets accepted instantly and nobody ever negotiates, you're leaving money on the table.
- Under comparable competitors. Shop your rivals. If you're materially cheaper for the same thing, there's headroom.
- Unpassed cost increases. If your suppliers, labor, or materials went up and prices didn't, your margin has been quietly eroding.
How to test before you commit
Don't flip a switch on the whole book. Treat a price change like an experiment.
| Method | How it works | Best for |
|---|---|---|
| New customers first | Raise prices only on new quotes; leave existing customers untouched at first | Service & project businesses |
| Segment test | Increase on one product line, location, or customer tier and watch the response | Multi-line or multi-site |
| Small across-the-board | A modest 3%, 7% lift with notice, then measure churn | Recurring / subscription revenue |
| New tier / value add | Introduce a higher-priced option alongside the old one | Where you can add real value |
Whatever you pick, measure: track whether volume holds. A price rise that loses a few price-shoppers but keeps your core is a win, the profit from the increase almost always outweighs the margin on the customers who leave. Model the impact on your numbers before and after, and remember the whole point of the deal was to build a healthy, cash-generating business you can eventually run through a manager.
How to communicate an increase
The message matters as much as the number. Do it well:
- Give advance notice. Tell customers before it takes effect, not on the invoice. Thirty days is a common courtesy for recurring accounts.
- Tie it to value, not ownership. "To keep delivering the quality and service you count on, our rates will adjust on [date]" beats "under new ownership, prices are going up."
- Keep the first move modest. A reasonable increase that sticks is worth more than an aggressive one that triggers an exodus. You can move again later.
- Protect your key accounts. Consider grandfathering, phasing in, or personally calling your biggest customers so they hear it from you, a natural extension of the relationships you inherited in the seller transition.
- Prepare your team. Staff who face customers need the reason and the script before the first question comes in, and shouldn't be left to absorb the blame.
Pair increases with visible improvements
The easiest time to raise prices is when customers can see they're getting more, faster service, better hours, a nicer space, a new offering. Line up a small, genuine improvement to launch alongside the increase and the conversation changes from "more expensive" to "better."
Benchmark before you move
Check where your margins and multiples sit against the market before touching price.
Frequently asked questions
Usually not immediately. Most experienced owners wait past the first 90 days so they understand the customers, costs, and competition first. Raising prices in week one, before you've earned goodwill or learned why prices sit where they do, risks losing customers you don't yet understand.
A common approach is at least three to six months, using the first 90 days to learn and stabilize the business. If prices are clearly below market or below cost, a smaller correction can come sooner, but always deliberately, not on day one.
Test on a subset first, keep the first increase modest, give advance notice, tie it to value rather than new ownership, and grandfather or phase in your most important accounts. Watch the response and expand only once the data shows customers are sticking.
Signs include prices unchanged for years, margins below industry norms, every quote accepted with no pushback, being well under comparable competitors, and rising costs that were never passed through. Compare against market rates and your own costs before deciding.
Sources & further reading
- Acquisition Ace guides, the 30/60/90 plan and industry multiples & margins.
- General small-business pricing and retention best practices; test and measure on your own customer base before rolling out broadly.
