The Dip After a Price Increase Usually Passes

Jennie Nash runs a business that trains people to become book coaches, and she has run it for more than 10 years. In 2023, she and her team spent months updating its two nine-month certification courses. She had long believed that the price was too low. The update seemed the right moment to raise it.

That June, she wrote, the business ran a “last chance” sale at the old price of $2,400, and 35 people bought. It announced that the updated courses would cost $3,600. In November, it opened enrollment again and “got no sales.”

Nash felt “deflated.” On some days, she wondered whether it was time to shut the business down. Instead, she ran the numbers again. She asked herself how she would feel back at the old price, and the answer was not good. So she kept the new one.

Then she looked for the real problem. She used to describe the course as a way for writers to start a side gig as a book coach. In her words, “a $3,600 course is far too high for someone wanting to start a side gig.” So she decided to describe it as a whole new career instead. She wrote all this in January 2024, before she knew whether anyone would buy at the new price.

A quiet stretch like Nash’s November can follow any price increase. Income can dip for a few months before it recovers. So set aside money for those months before you raise your price. Then hold the price until the date you set to check it. Here is why the dip happens, what the months can look like, and what to do if they run long.

The dip after a price increase has three causes you can plan for

A quiet month after a price increase can feel like proof that the price was wrong. Usually it has ordinary causes, and you can plan for each one. Together they make the gap. The gap is the months between the price change and the day new clients replace the ones who left.

The first cause is the date your current clients move. When you raise your price in stages, new clients pay the new price first. Current clients keep their old rate until a later date that you announce, a few months later. On that date, any current client who does not want the new price leaves. Their payments stop that day, often before enough new clients have arrived to replace them.

The second cause is how long new clients take to arrive. At a higher price, new clients often come through people who already know your work. One of them might be a client who passes your name to a friend. Here is the course’s view of why that takes months. A friend may hear your name at a dinner, but she calls you only when she next needs the work.

The third cause applies when you announce the increase ahead of time. Clients who were ready to buy may buy before the old price ends, because they want the lower price. That moves their money into the months before the change. Nash’s last-chance sale may have done some of this, though she concluded that her main problem was how she described the course.

The gap usually closes. Chris Cooper runs Two-Brain Business, which mentors gym owners. One of its mentors, Greg Strauch, has worked on 81 price increases with the gyms he advises. Across those gyms, Cooper wrote, “all owners more than covered the cost of departures with the increases.”

A trainer’s income dips for two months and then ends higher than before

Imagine a personal trainer named Nora Pell who has 10 clients on monthly packages at $600 each. That is $6,000 a month. She rewrites her offer as a monthly program for golfers who want to play without back pain.

Because the program is new, Nora sets its price from scratch. Golfers in her area already pay $700 to $900 a month for coaching like hers. She has room for 10 clients at most, so her income can grow only if each client pays more. So she sets the program at $800, near the middle of what golfers already pay.

Before she announces anything, Nora sets aside six months of expenses. On March 1, the program goes on her website for new clients. The same day, she tells her current clients that it replaces their packages from June 1.

In March and April, fewer people than usual ask about her sessions. At the end of April, Nora tells a friend at the gym that she may have priced herself out of work. The friend asks what she will do. Nora says that she will leave the price at $800 until August 1, the date she set to check. In May, one new client signs.

On June 1, four of her 10 current clients decide that the new program is not for them, and they leave. In June, Nora has six current clients at $800 and one new one, which is $5,600. That is $400 less than she earned in March, so she takes $400 from the money she set aside. July is the same.

By August 1, two more new clients have signed. Nine clients at $800 bring in $7,200 a month. That is more than Nora earned in March, with one fewer client.

Why cutting the price in a quiet month goes wrong

Imagine a home organizer named Bettina Crane who keeps 12 households in order with a monthly visit, at $450 a month. Her price goes to $520 for new households on April 1 and for current households on July 1. She has set aside six months of expenses, and she plans to check on September 1.

In late May, Mrs. Ostrow emails to ask about monthly visits, and whether Bettina has any flexibility on the $520. Bettina sees the email in her car between two houses. No new household has signed since April. She replies that she can do $450 for the first year, and Mrs. Ostrow signs.

In July, Mrs. Ostrow mentions the price to her neighbor, Mrs. Fenn. Mrs. Fenn is one of Bettina’s current households, and she has just moved to $520. Mrs. Fenn asks Bettina why a new client pays less than she does. Bettina lowers Mrs. Fenn to $450 as well. By September, three more current households have asked for $450, and Bettina has agreed each time. The money she set aside is still in the bank.

Bettina’s mistake was cutting the price in a quiet month, before the date she set to check. A lower price ends the quiet by bringing back the clients who wanted the old price. Her current clients also learned that her new price does not hold.

In the version that works, Bettina gives Mrs. Ostrow the price once, with what it covers, and offers nothing lower. “It’s $520 a month, with a visit every second Tuesday and the pantry restocked each time,” she writes. She leaves out her old price, because Mrs. Ostrow has never heard it. Mrs. Ostrow thanks her and hires someone cheaper. On July 1, four current households leave rather than pay $520, and Mrs. Fenn moves to $520 with the rest. Bettina’s income for July is $1,240 less than in June, and she covers it from the money she set aside. In August, two new households sign at $520.

The money you set aside exists for this stretch. Spend it on waiting, and leave the price alone until your check date.

When the quiet runs past your check date, change the offer before the price

Nash did not take her empty November as proof that the price was wrong. In her words, she had not taken “the right message to the right pool of potential students.” So she changed how she described the course, and she kept the price.

A price sits among three parts of your business that a client can see. They are the offer, the words you use to describe it, and the client list. The client list is who sees the price at all. Here is the course’s suggestion for the quiet you may find on your check date.

If people ask about your work but do not hire you, then people are finding you. Something in what they hear after that does not fit. So rewrite the offer, or the words you use for it.

If nobody asks at all, too few of the right people know about you yet. So spend the next months going back to the rooms where they meet. In both cases, the price stays where it is.

How to get through the gap

Count the months from the day you announce the increase to three months after your current clients move to it. The course suggests the extra three because new clients take that long to arrive. For example, a tutor who announces on September 1 and moves current families on January 1 counts seven months, September through March.
If you sell one project at a time, count six months from the day the new price goes on your website. The course suggests six because it is the shortest count in step 1.
Before you announce, set aside enough money to cover your expenses for that many months. Then a dip in income cannot push you into cutting the price.
Choose your check date near the end of those months, before the money would run out. Write it in your calendar, with the two signs you will look for. One is people who ask but do not hire you, and the other is nobody asking at all.
Until the check date, take a quiet month as part of the gap. If someone asks for a lower price, give the price and what it covers, and stop. For example, a family photographer can say, “A session is $900, with 30 edited photos and one framed print.”
On the check date, count the inquiries since the increase and the clients they became. If people asked but did not hire you, rewrite the offer or the words you use for it. If nobody asked, spend the next months meeting more of the right people. Leave the price where it is either way.

Next: You will meet the four kinds of wealth one at a time, starting with inherited wealth. A household that inherited its money tends to keep the people it hires for years.