Price-rise calculator

Why a modest rise does so much work

A price rise doesn't change what it costs you to deliver the job, so the whole increase lands in gross profit. In the example loaded above, a tradie charging $105 an hour with $68 of direct cost keeps $37 an hour. A 5% rise takes the rate to about $110.25 and the gross profit to $42.25, an increase of more than 14%. The thinner your margin, the more a small rise moves the result.

Turn that around and you get the question that worries most owners: how many customers could I lose before it backfires? The calculator answers it directly. Divide today's gross profit per sale by the new gross profit per sale and you have the share of sales you need to keep. Everything above that is extra profit; everything below it means the rise cost you.

Using the answer

Set the expected-loss slider to what you honestly think will happen, then compare it with the break-even figure. If you expect to lose 2% of hours and could lose 12% while standing still, the decision is easy. If the two numbers are close, consider a smaller rise, a rise on your most under-priced services only, or adding something customers value at the same time. Our guide to putting prices up without losing customers covers timing, notice and wording, and how to work out a charge-out rate shows how to build a rate from your real costs.

The same arithmetic works against you with discounts: a 10% discount on a 30% margin needs half as many sales again just to stand still. Margin vs markup has the table.

April is the natural time to check

New Zealand's minimum wage and KiwiSaver changes take effect on 1 April, and most employers' costs step up on that day. Running this calculator in February or March, with your new costs plugged in, tells you how far prices need to move to keep your margin. See repricing after the minimum wage rise.

Better margins, then the next move

Owners often lift prices ahead of a growth step, such as a new hire, a second van or a bigger premises, so the stronger margin helps carry the new cost. If that's your plan and you'd like funding lined up behind it, we consider unsecured options for trading businesses, typically $5,000 to $500,000, and loans secured on property from $20,000 to $5,000,000. Asking involves no credit check, your enquiry isn't passed around to other lenders, and a real person on our New Zealand team reads it. Answer accurately and we can be specific on the first call. Start an enquiry.