In short: Robert Nikic on how to raise prices without losing customers: why founders underprice, what a 1% price change can do to profit and how to stop discounting.
Somewhere a founder is about to send a quote, and they've already knocked 15% off before anyone asked.
They'll call it being competitive. It's really fear wearing a sensible jacket.
I've watched this habit hold back more good companies than bad products ever have. And I'll say it plainly: most small businesses I've seen don't have a sales problem. They have a pricing problem they're too polite to fix.
Why founders underprice
It usually starts in a reasonable place. Early on, you need customers, any customers. A lower price gets the first deals done. Fair enough.
The problem is that the early price never gets revisited. The company gets better, the product improves, the team grows, costs go up, and the price stays exactly where a nervous first-year founder put it.
Underneath it are a few beliefs I hear over and over:
- "If I charge more, they'll go somewhere else."
- "Our competitors are cheaper."
- "We're small, so we have to be the value option."
Every one of those sounds humble. Every one of them is a guess.
What underpricing actually costs
It costs margin you'll never get back. Here's the number that changed how I think about it. In a well-known Harvard Business Review article, McKinsey's Michael Marn and Robert Rosiello showed that a 1% improvement in price, with no loss of volume, raised operating profit by 11.1% for the companies they studied (Harvard Business Review; SciSpace summary). One percent on price did more than almost anything else they could pull.
Now run it backward. Every unnecessary discount is that lever working against you.
It attracts the wrong customers. The customers who choose you only because you're cheapest are the first to leave when someone is cheaper. They also tend to be the most demanding. I've written about what happens when one customer gets too big to lose; the cheapest customers often aren't far behind.
It sends the wrong signal. For a lot of buyers, price is a signal of quality. When you're the cheapest option by a mile, some customers don't think "great deal." They think "what's wrong with it."
It starves the business. Low prices mean thin margins. Thin margins mean no money for better people, better tools or a cash buffer. The company works harder every year just to stay in place.
The apology habit
Here's the part I notice most. Founders who underprice also apologize for their price.
"I know it's a lot, but..." "We can probably work with you on this." "Let me see what I can do."
Every one of those sentences tells the customer the price isn't real. So they push, and they're right to.
A confident price is stated once, explained if needed and then left alone. Silence after a number isn't awkward. It's how serious companies sell.
How to raise prices without losing customers
You don't need a dramatic announcement. You need a plan.
Start with new customers. The easiest place to raise prices is with people who've never seen the old ones. Update the price list and let the new number become normal.
Give existing customers notice. A clear letter or email, sent well ahead of the change, with a plain reason. Rising costs and a better product are reasons enough. No groveling.
Add a top tier. Offer a premium version with faster service, more support or extra features. Some customers will take it, and the standard price suddenly looks reasonable.
Stop discounting by reflex. If you give a discount, trade it for something: a longer contract, payment up front or a bigger order. A discount that buys nothing is just a donation.
Watch what happens. In most companies I've seen raise prices thoughtfully, a few customers leave and the business ends up healthier. The ones who leave were often the least profitable to begin with.
Quick answers
How do you raise prices without losing customers?
Raise prices for new customers first, give existing customers clear notice, tie the increase to the value you deliver and state the new price plainly, without an apology. In what I've seen, the customers who leave over a fair increase tend to be the least profitable ones.
How do you stop discounting?
Replace discounts with options: a smaller package at a lower price, or more value at the same price. Set a written rule for when a discount is allowed and who approves it, so it stops being a reflex.
What is Robert Nikic's advice on pricing?
Robert Nikic's advice is to charge for the value you deliver and stop apologizing for it. Research by Marn and Rosiello found that a 1% price improvement could lift operating profit by 11.1% for a typical company (Harvard Business Review; summary), which is why a small, confident increase often matters more than more volume.
The real point
Pricing isn't math first. It's confidence. It's a statement about what your work is worth and whether you believe it.
The founders I've seen build strong companies weren't the cheapest in their markets. They were the clearest. They knew what they delivered, charged for it and didn't flinch.
Your price is the first promise you make. Make one you can keep, and stop apologizing for it.
Related reading
Robert Nikic is an entrepreneur, TEDx speaker and advisor on innovation and economic growth. He writes about what he has seen build and break companies, and about the rules that decide whether small businesses get a fair shot. Read his writing on Medium, the Open Doors newsletter on LinkedIn and daily posts on X.
