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A 10% raise with 5% churn adds $29,700/yr of profit — and tolerates losing 28.6% of clients before it stops winning. Your churn fear is not priced correctly.
The raise-your-prices decision is mirror-image of the discount trap: price increases flow almost entirely to margin because cost per client does not rise. The math at the defaults — 200 clients at $150/mo, 25% margin, a 10% raise with 5% churn — profit climbs $29,700 a year WHILE serving 10 fewer clients, and the raise keeps winning until churn passes 28.6%. Real churn on a well-handled raise runs 2–8%, not the 20% owners imagine. And the clients who do leave are disproportionately the slow-paying, high-support ones — the churn you get is the churn you wanted. This calculator prices your raise, your churn, and your breakeven.
Business owners use it before the price-increase letter: a 10% raise with 5% churn adds $29,700/yr and tolerates 28.6% churn before losing — the clients who leave over $15/mo were your most expensive revenue.
Handling beats timing, and both beat silence. Notice: 60–90 days minimum — same-month raises read as ambushes and convert grumbling into shopping. Reason with substance: pair the letter with something concrete — a service improvement, faster turnaround, added report — not "costs have gone up" (your costs are not their problem), but what they GET. Grandfather strategically: your best 10–20% of clients by profit get 6 months at the old rate or a smaller bump — retention where it pays, and the gesture generates loyalty worth more than the concession. Confidence is the multiplier: the letter states the new price and the date, full stop — apologetic hedging ("unfortunately," "we hope you understand") invites negotiation, while a matter-of-fact raise with a reason converts. What never works: sneaking it into a renewal without notice (that is how you become the villain in their retelling) and raising during their crisis. Frequency discipline: 5% every year beats 20% every four years — predictable small raises normalize the motion, while the big catch-up raise is the one that triggers the real exodus. The clients lost to a well-handled raise were leaving at the next raise anyway.
Because of where the money flows — the same asymmetry that makes discounts deadly, running in your favor. A price raise adds revenue with zero added cost: on a $150 client costing you $112.50 to serve, the 10% raise turns $37.50 of margin into $52.50 — a 40% jump per retained client. Churned clients, meanwhile, take their revenue AND their costs with them: losing a client costs you only the $37.50 margin, not the $150 revenue. So each retained client funds the loss of nearly half a churned one — the breakeven lands at 28.6% in the default case, and higher at thinner margins (a 10% raise at 40% margin tolerates 40%+ churn). The practical read: if your honest churn estimate is single digits — and for well-handled raises to sticky B2B services, it is — the raise is not a risk decision, it is a collection decision: you are already earning the money, you are just not invoicing it. The sensitivity table to run in this calculator: your raise at 5%, 10%, and 15% churn. If it wins at 15%, send the letter.
Segment before you send — a flat raise to a mixed base is leaving money and loyalty on the table. Tier by profitability, not revenue: your per-client margin varies wildly, and the raise should concentrate where the relationship is healthy. Full raise: profitable clients with low service intensity and market-rate alternatives — they stay. Grandfathered or phased: your top-decile relationships — the strategic accounts where 6 extra months at the old price buys goodwill that outvalues the delta. Higher-than-average raise: the below-market legacy clients — the ones priced at 2019 rates who consume 2026 support; either they reprice to reality or they churn, and both outcomes are wins (this is the segment where the breakeven churn math is most forgiving). Deliberate churn pricing: the genuinely unprofitable — slow payers, scope-creepers, support hogs — get the aggressive number; if they leave, profit rises, and if they stay, they finally pay for themselves. The analysis to run first: revenue and true cost-to-serve per client (support tickets, payment slowness, revision cycles) — most owners can name their top ten revenue clients and not their top ten profit clients, and the lists rarely match. The make-ready principle applies here: know your numbers per client before the letter, and the letter writes itself.