Most agencies don’t really have a pricing problem — they have an inflation problem.
Costs creep up, margins quietly erode, and suddenly the owner is wondering: “Where did the profit go?”
The fix is simple, predictable, and massively compounding: install annual price increases.
Why Annual Price Increases Matter
Raising prices drives profit two ways:
- More gross profit per client — each account contributes more to your bottom line.
- Fewer clients to service — by definition, if some churn, your delivery costs drop.
Price to maximize lifetime profit, not just the first sale.
Compounding is where the magic happens. Even modest annual lifts of 8–12% stack into huge gains over just a few years. Not raising prices is how strong agencies quietly become unprofitable.
The Play (Step by Step)
1. Pick Your Percentage
Start with 5–15% depending on your value and market positioning. Apply it to all new contracts immediately.
2. Put It in Writing
Add “annual price increase” language into every agreement. Apply it like clockwork — no drama, no special cases.
3. Script It
Give your team a simple explanation:
“To keep delivering at our current standard, we align our rates with cost increases. This protects quality and ensures we don’t cut corners.”
Position it during paperwork, not as a sales objection.
4. Sequence the Rollout
- New customers: effective now.
- Existing customers: 30–60 days’ notice, tied to a meaningful delivery milestone (e.g., right after a big win).
- To ease transitions, offer a small loyalty credit on the first invoice — an ethical nudge that softens the shift.
5. Set the Owner’s Scoreboard
Track:
- Net dollar retention
- Churn at renewal
- Average price per unit over time
If churn holds steady while profit climbs, you’re on track. If churn ticks up, focus on tightening delivery and communication — don’t panic-cut price.
Why This Works Fast
Pricing changes move gross profit more than almost any other lever.
In a 10% profit business, a modest lift can double or even triple profit if sales hold. That’s why pricing is the first place we look when improving margins.
Think of price as a dial: keep turning it until revenue growth plateaus. Then hold steady.
What to Say to Nervous Clients
“We raise prices so we can keep delivering the results you hired us for.”
Premium pricing funds premium service. That creates the win-win: client surplus and sustainable profit.
Call to Action
Book an Agency Finance Health Check.
I’ll help you:
- Install your annual price increase clause
- Pick the right percentage
- Script the rollout for both new and existing clients
Protect your margins and compound profit this year.
We run just two slots per month — book HERE to claim one.
About the Author
Michael Argento, CPA
Founder + Fractional CFO at Argento CPA
Michael helps ambitious Canadian business owners align compensation with performance. From creative agencies and SaaS startups to scaling construction trades businesses, he builds financial systems that reward results — without sacrificing sustainability.