Think Raising Prices is Always the Answer? Think Again.

_{[Read time: 3.5 minutes]}

Conventional wisdom says, “raise your rates”

I even say it.

And in many cases, it’s good advice — especially because many service businesses undervalue themselves.

There are times when lowering your price — or resisting the urge to increase it — is actually the strategic move.

Done right, it can attract the right clients, increase revenue, and create long-term stability.

Here are three situations where keeping prices lower makes more sense than pushing them up:

1 — When your close rate is too low.

A low close rate doesn’t automatically mean pricing is the problem, but it’s a signal. Especially if prospects also say something along the lines of, “I love this, but I can’t afford it.”

Pricing should act as a natural filter for your best-fit clients — if the right people consistently walk away, that’s a sign of misalignment.

What you can do:

• (First) this requires you to track and review you sales conversations (yes, this means taking notes)

• (Then) Test a restructured offer before lowering your price. A smaller upfront fee, payment plans, or breaking the service into accessible tiers can remove friction. If those don’t work, experiment with a small price reduction to see if it moves the needle.

This isn’t about underpricing — it’s about making sure the right people can say yes without unnecessary hesitation.

2 — When a lower entry point leads to higher lifetime value.

Sometimes, a lower starting price can create a clear path to bigger revenue.

After all pricing isn’t just about what you charge today — it’s about what a client is worth over time.

This is something my friend Sarah and I talked about on many occasions (including when I guested on her podcast). She refers to them as gateway offers — an entry point that makes upgrading to your signature service a natural next step.

I’ll be straight with you. I have a gateway offer I’m resisting the urge to raise. Not because it isn’t worth more, but because I want it to be a no-brainer. And because it allows me to show you how I can help, instead of just telling you.

What you can do:

• Build a gateway offer — something that gets clients in the door and leads to a larger engagement.

• Take a piece of your signature service and sell it separately as an accessible starting point.

If your business thrives on repeat work, relationships, or upsells, keeping prices lower at the beginning can actually increase total revenue.

3 — When you’ve outpriced your strategic advantage

This is the biggest risk of the “just keep raising your prices” mindset.

Every business has a reason people choose them. Maybe you’re the fast, accessible alternative to big-name firms. Maybe you provide personalized service that others can’t match. Whatever it is, your pricing needs to align with it.

If a price increase pushes you into a different tier — where you’re now competing with companies that have different strengths — you might unintentionally lose what made you attractive in the first place. Worse, you might price yourself into an entirely new customer profile that isn't actually the best fit for your business.

For example, a consultant who built a business by being the high-value, cost-effective alternative to large agencies could lose their edge if they suddenly start charging agency-level prices. The pricing and positioning no longer makes sense.

What you can do:

• Reacquaint yourself with your ICP and consider going on a no-obligation discovery tour to find what customers actually value in your offer (Is it efficiency or affordability relative to value or personalized attention?)

Lowering your price — or resisting an increase — doesn’t mean undervaluing yourself. It means understanding the tradeoffs.

If your pricing is blocking sales, limiting customer lifetime value, or pushing you into the wrong market, staying lower can be the smarter play.

Thank you for reading.

See you next week.

— Peter

P.S. I used to hesitate to pitch these offers, but I know how valuable they are. Not telling you about them would be irresponsible.

$10K in 1 Day (Business Audit): Most business owners try to see it all, but it’s hard to read the label from inside the jar. If you want stop leaking profits, avoid inefficiencies, and walk away with an extra $10,000 — start here with a holistic business audit.

Let’s Get Pricing Right (Pricing Strategy): Pricing is the biggest driver of profit, but almost no one gets it right. If you want to charge the right price, sell with ease, and attract better clients — start here to (finally) get pricing right.