You’re Busy—But Where’s the Profit?
If you’re like most founders in high-growth creative agencies, service or tech industries, you’re constantly working, scaling your team, and pushing hard on marketing. But at the end of the month, your profit still doesn’t reflect your effort.
You may not need more leads or a new hire. You might just need to raise your prices.
Raising your prices—when done strategically—is the fastest way to improve profit without increasing your costs. It requires no new systems, no new marketing spend, and no added delivery burden. Just better math, more clarity, and confidence in your value.
Let’s walk through why pricing is your most powerful profit lever, how to do it right, and what most entrepreneurs get wrong.
The Most Powerful Profit Lever in Your Business
Here’s the truth: a small change in price can have a massive impact on your bottom line.
For example, imagine a company earning $10 million in annual revenue with a 10% profit margin. That’s $1 million in profit.
Now raise prices by just 1%. That’s an extra $100,000 in revenue, with no additional cost. Your profit rises to $1.1 million—a 10% increase in net profit from a 1% change.
No need for more leads, labor, or operational complexity. That’s the power of strategic pricing.
Don’t Fire from Your Own Wallet
Founders often underprice because they project their own ideas of what’s “too expensive” onto their clients. But your prospects may be feeling much more urgency and pain than you realize.
You might be fit, but they’re out of shape. You see your service as simple—they see it as a lifesaver.
Let your clients decide what’s expensive. Your pricing should reflect the transformation you deliver, not your internal comfort level. And remember—your price is often a reflection of how much you value yourself.
Protect Your Prices
Clients who pay more are typically more committed, more decisive, and higher-performing. Why? Because they’ve made a real investment.
Higher pricing gives you the margin to reinvest in your service, team, and delivery process. Better service leads to better results, stronger retention, and more referrals.
This is how you move from simply making sales to building a business that scales with quality and consistency.
Understand Pricing Elasticity—And Stop Fearing It
Most founders overestimate how price-sensitive their market is.
- If your offering is elastic, raising your price may reduce demand.
- If it’s inelastic, raising your price has little to no effect on demand.
Many fear that increasing a price from $3,000 to $5,000 will cause sales to drop by 70% or more. This is almost always false. In most cases, you’ll lose a few lower-quality buyers—but gain a stronger business overall.
Every extra dollar added to your price is pure profit—your cost to deliver usually remains the same.
Real-World Comparison: The “Top of Pocket” Pricing Strategy
Let’s look at two actual pricing models using the same $50,000 ad spend.
Top of Pocket 1: Lower Price, Higher Volume
- Price: $5,000
- MQLs: 50
- Win rate: 60%
- Clients: 30
- CAC: $1,667
- Revenue: $150,000
- COGS: $60,000
- Profit: $40,000
- Margin: 27%
- Annual Revenue: $300,000
- Lifetime Value (LTV): $10,000
- Lifetime Profit: $6,333
- Total Profit: $190,000
- Total ROAS: 6.0
Top of Pocket 2: Higher Price, Fewer Clients
- Price: $10,000
- MQLs: 50
- Win rate: 30%
- Clients: 15
- CAC: $3,333
- Revenue: $150,000
- COGS: $30,000
- Profit: $70,000
- Margin: 47%
- Annual Revenue: $300,000
- LTV: $20,000
- LTP: $14,667
- Total Profit: $220,000
- Total ROAS: 6.0
Even with half the clients, the higher-priced model produced more profit, better margins, and greater efficiency. Fewer clients means more capacity, better service, and often—more referrals.
How to Calculate Elasticity and Test Price Points
To make smart pricing decisions, follow this framework:
- Calculate revenue and gross margin at different pricing tiers
- Estimate your customer lifetime value and impact on churn
- Split test prices in live sales calls or marketing campaigns
- Calculate revised lifetime profit:
- (Gross profit per sale × purchase frequency) – CAC
You may see lower conversion at higher prices, but if your clients are more profitable, it’s worth it.
Why You’re Not as Profitable as You Think: The Utilization Trap
Many pricing calculators assume 100% team utilization. That’s a mistake.
Employees take vacation. They attend meetings. Not every hour is billable.
A realistic utilization rate is 65%. That means a team member earning $100,000 annually isn’t costing $48/hour (based on 2,080 hours), but more like $74/hour (based on ~1,350 billable hours).
If your pricing doesn’t reflect this, your margins are thinner than they appear. Update your model to reflect reality—not fantasy.
Cost-Plus vs. Competitor-Based vs. Value-Based Pricing
There are three main pricing strategies:
1. Cost-Plus Pricing
- Adds a markup to your costs
- Simple, but ignores perceived value
- Often leaves money on the table
2. Competitor-Based Pricing
- Sets price based on market norms
- Easy to benchmark
- Assumes competitors have done their homework—which may not be true
3. Value-Based Pricing (Recommended)
- Focuses on the result or transformation for the customer
- Allows you to price at the level of the outcome, not the input
- Supports higher margins, better service, and stronger brand positioning
For service businesses, value-based pricing is usually the most scalable and profitable path.
5 Practical Ways to Increase Prices Without Pushback
- Switch to 4-week billing cycles – Adds 8.3% in revenue per year
- Pass on credit card fees – Adds 3–4% to your margins
- Apply annual CPI or performance increases – 3–10% annual bump
- Add an annual reassessment or renewal fee – Captures 5% more
- Introduce a warranty or guarantee – Justify 5–15% higher pricing
Small, consistent increases can compound significantly over time without creating client resistance.
Make Pricing Strategy a Repeatable Process
A study by ProfitWell found:
- Businesses that continually test pricing see 11x higher LTV:CAC
- Annual testers achieve 3x better results than those who never test
You should review your pricing at least once a year—but ideally, make testing part of your ongoing sales process. Pricing is not static. It’s a strategic lever.
Build a Smarter Pricing Calculator
Every business is different, so you need a calculator built around your model. Include:
- All direct costs (labour, materials)
- Realistic utilization (55–75%)
- Overhead allocation
- Target gross profit
- Customer acquisition cost
- Lifetime value and churn
A good pricing model gives you clarity and confidence. And most importantly—it makes sure you’re not growing broke.
Need Help Building Your Pricing Strategy?
At Argento CPA, we specialize in helping tech-savvy founders in SaaS, trades, and service industries confidently price for profit. As fractional CFOs, we work closely with business owners to build pricing calculators that reflect true costs, healthy margins, and strategic growth goals.
If you’re unsure whether your current pricing supports the business you want to build, let’s talk.
Schedule a free pricing strategy consultation
About the Author
Michael Argento, CPA
Founder + Fractional CFO at Argento CPA
Michael works with ambitious Canadian business owners who want clarity, confidence, and control over their financial strategy. With more than a decade of experience advising founders in B2B, creative agencies, SaaS, IT, e-learning, and trades, he brings a practical and strategic approach to pricing, profitability, and scaling smart.