How do you raise prices?
At a glance:
Raise prices when your total burden is rising, demand > supply, labor is scarce, or value/WTP has expanded. And, do it with evidence, guardrails, and clear messaging. Waiting “until we can’t wait” is how healthy businesses quietly starve.
WHAT IT IS
Indicators and triggers make up the short list of signals you watch (costs, capacity, labor, win=rates, customer mix) and the rules you set for when to act. Instead of reacting to a crisis or a competitor’s move, you build a simple dashboard (total burden, demand vs. capacity, value/WTP) and define in advance what level and duration of change should trigger a test increase in a product, region, or segment.
WHY IT MATTERS
Keeps you solvent when inputs move faster than you can renegotiate.
Turns gut feelings into rules, using capacity, backlog, and wage growth to tell you when to move.
Reduces fire-drill hikes and moves you to a regular pricing cadence.
Makes comms easier and gives you a clean, honest, “why now” for customers and staff.
CASE FILE
HCA Healthcare: Cost Pressure + Contract Deadlines = Triggers to Reprice (Not “Vibes”)
“Hospitals face a perfect storm of financial pressures: persistent cost growth, inadequate reimbursement, and shifting care patterns…”
– American Hospital Association, The Cost of Caring
Setup. Hospitals don’t get to opt out of inflation. Labor alone is now about 56% of total hospital costs, and advertised RN salaries have grown 26.6% faster than inflation over the past four years. Meanwhile, reimbursement can lag: from 2022–2024, the AHA notes general inflation rose 14.1% while Medicare net inpatient payment rates increased only 5.1%. That gap becomes a pricing trigger: either costs come back down (rare), or you go get paid elsewhere (commercial).
Move. HCA Healthcare turned “when to push price” into hard triggers tied to (1) cost pressure and (2) contract clocks. In a 2024 dispute with UnitedHealthcare, the negotiation had a clear forcing function: a contract deadline that could have disrupted coverage across 38 hospitals in multiple markets. United’s public messaging claimed HCA’s requested increases were as high as 30% over two years in South Carolina or 16% in a single year in Texas. Whether or not you like the numbers, the mechanism is the point: pre-set renegotiation windows + walk dates create an explicit “move moment.”
Outcome. The sides ultimately reached a multiyear agreement, avoiding the coverage interruption. And HCA’s pricing/contract tailwinds show up operationally: same-facility revenue per equivalent admission rose 6.6% in Q3 2025 vs. Q3 2024.
Lesson.
Build a trigger stack for price moves: cost indicators (labor share, wage inflation) → reimbursement gaps (inflation vs. government updates) → contract deadlines. When those trip, you don’t “consider” raising prices – you execute the playbook.
Framework:
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Output prices typically move less than one-for-one with costs – and the pass-through depends on market power and competition. Some firms with strong markups absorb more cost; others raise prices quickly and widen margins. That means “our costs went up 10%, so we raise 10% everywhere” is rarely right, but “we’ll just eat this” is usually worse.
Takeaway: Track a simple Total-Burden Index (materials + freight/energy + wages/benefits + key overhead) and use it to size potential increases, not to justify automatic one-to-one moves.
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Capacity utilization and backlog of work are classic forward signals for pricing power; they tend to precede higher prices and inflation because first hit practical limits and start using pricing as a rationing function.
Takeaway: Watch utilization (people, machines) and backlog by line of business. When you’re consistently above your comfort range, favor price and mix quality over volume.
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Tight labor markets (high vacancies, high quits, low unemployment) lead to faster wage growth, which then passes through to prices over time. For operators, the punchline is simple: When your wage bill is rising structurally and you don’t adjust price, you’re quietly accepting margin compression.
Takeaway: Treat sustained wage growth above your long-run norm as a trigger to review pricing, especially in labor-intensive services.
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Costs tell you when you need room; demand and value tell you when the market will bear it. Signs you have headroom: win-rate stay high at the top tier, discount requests fall, customers trade up even when you nudge price, or your offer is clearly differentiated versus NBAs.
Takeaway: Pair cost indicators with value/WTP indicators (upgrade mix, win-rate at higher tiers, discount dependency) so you don’t leave money on the table or move blind.
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Trigger-based reviews live on a spectrum with more proactive tools:
Index-linked escalators in contracts (e.g., annual adjustment to a wage or materials index).
Transparent surcharges (fuel, freight, specialty material) tied to published indices.
Dynamic pricing windows in more transactional businesses (e.g., peak/off-peak, yield management in capacity-constrained services).
Used well, they keep your economics closer to real time (although beware; used poorly they feel like arbitrary gouging).
Takeaway: Where appropriate, build small, transparent automatic adjustments so you’re not stuck waiting years to reflect structural cost and demand changes.
OPERATOR CHECKLIST
◻️ We’ve defined our Total-Burden Index (TBI) and update it at least quarterly (materials, freight/energy, wages/benefits, key overhead).
◻️ We track capacity and backlog by line of business, setting “comfort ranges” for utilization and lead times.
◻️ We monitor wage growth in our market and in our own payroll, flagging it when it runs ahead of the long-term norm.
◻️ We’ve added value/WTP signals to the dashboard: upgrade mix, win-rate at higher tiers, discount rates by segment.
◻️ Our trigger rules are clear: e.g., “If TBI > +6% YoY and backlog > 6 weeks for 2 months, we test +4%-6% on Better/Best in Region A.”
◻️ We’ve named the pilot slice in advance (SKU/segment/channel) and decided success criteria (volume, churn, margin, CS load).
◻️ Ownership has been assigned: one person (or small committee) owns the dashboard, the review cadence, and the recommendation.
◻️ We’ve documented the “why now” story in plain language so comms and field teams aren’t improvising under pressure.
SIGNAL TO WATCH
If your backlog stays full, rush requests grow, and overtime rises while realized price stays flat, you might be ready for a price increase.
ONE QUICK ACTION
Pick three metrics – like Total-Burden Index (TBI), capacity utilization/backlog, and win-rate at higher tiers. Set simple thresholds and a rule: if two of three stay off track for two consecutive periods, we run a contained price-increase pilot on one SKU/segment.
COMMON TRAPS
Letting costs and wages compound for years before a crisis forces a big hike that shocks customers and staff.
Only watching gross margin % at the P&L level, not for individual SKUs or segments.
Treating competitor moves as your main trigger.
Reacting to every blip instead of abiding by indicator rules.
Raising prices across the board instead of piloting in low-risk slices and learning.
Passing through more than the index or keeping “temporary” fees forever (can you say fairness blowback?).
Experiment 1:
DASHBOARD: BUILD YOUR INDICATORS
What it’s for: Create a simple dashboard that tells you at a glance whether the business conditions support a price test right now (cost, capacity, demand/value, customer experience).
Who it’s for: GM/CEO + Finance/RevOps + Sales/Ops leader who want a monthly/quarterly check without building a BI project.
What it does: Stops you raising prices by gut feel and allows you to monitor a small set of indicators, flag breaches, and use those flags to initiate controlled price tests.
Use when you need…
Clarity: Everyone sees the same “are conditions favorable?” answer.
Speed: Minimal dashboard, no BI build required.
Strategic insight: Forces discipline around when to push price vs hold.
Experiment 2:
ACTION SYSTEM: SET YOUR TRIGGER RULES & QUARTERLY PRICE REVIEW
What it’s for: Translate indicator breaches into 2–3 simple rules that automatically prompt specific, controlled price tests with documented slices, guardrails, owners, and retrospectives.
Who it’s for: Pricing owner + Finance + Sales/Ops leaders who need a repeatable quarterly process that produces decisions, not debate.
What it does: Lets you turn “signals” into “moves.” When conditions are met for long enough, you don’t argue — you run a defined test.
Use when you need…
Clarity: Removes debate about “is now the time?” The rule answers it.
Speed: Converts signals into a repeatable test brief with owners and dates.
Strategic insight: Retrospectives compound learning into a pricing playbook.
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