Most struggling small businesses I get asked about are not underfunded.
They are underpriced.
The arithmetic of a price change is not intuitive, so here it is in full.
Say you sell something for $100. It costs you $60 to deliver. Your gross margin is $40.
Raise the price 10%, to $110. Margin per sale goes to $50.
You can now lose 20% of your customers and be exactly where you started. Same gross profit, on 20% less work, 20% less delivery cost, 20% less risk and 20% fewer things to go wrong.
Now run it the other way. Discount 10%, to $90. Margin drops to $30.
You now need 33% more volume just to stand still.
That asymmetry is the whole game. A discount that feels like a small gesture requires a third more business to pay for itself. A rise that feels enormous can be absorbed by losing a fifth of your customers, and the fifth you lose is usually the fifth that costs you the most to serve.
Two honest caveats.
This is arithmetic, not a study. Your elasticity is your own, contracts constrain you, and some markets genuinely will not carry a rise. Run it on your real numbers rather than trusting mine.
And the real reason owners underprice is almost never analysis. It is the anticipated conversation. You are not protecting the customer from the price. You are protecting yourself from having to say it out loud.
Do the sum this week. Then decide whether your price is actually right, or just familiar.
Sources and notes
No source list this week, because there is no study behind this one. It is arithmetic, and it works the same way in every currency.
If you want the general form: the volume you can afford to lose after a price rise is the price rise divided by the new margin. On a $100 price, $60 cost and a $10 rise, that is 10 divided by 50, or 20%. The volume you must gain after a discount is the discount divided by the new margin: 10 divided by 30, or 33%.
Put your own price, cost and change into those two lines and you will have a better pricing conversation than most businesses ever have.
Happy to sanity-check the sum on your numbers if you want to put them in a message.