Will Raising Prices Hurt My Sales?

Yes, raising prices will probably hurt your conversion rate.

But here's what most brands miss: conversion isn't what pays the bills. Profit per visitor is. And sometimes fewer customers at higher margins beats more customers at lower margins.

The only way to know for certain which scenario applies to your business is to test. Let's explore why raising prices might be the most profitable move you make.

What Actually Happens When You Raise Prices?

Higher prices typically mean lower conversion but better margins

When you raise prices, you're making a bet. You're betting that higher margins on each sale will more than offset the customers you lose to the price increase.

Sometimes this bet pays off spectacularly. Sometimes it doesn't. The outcome depends on how your specific customers respond to your specific price change on your specific products.

Consider two brands that both lower prices by 10%. The first sees conversion jump 28%, driving a 15% revenue increase and 7% profit increase. The second sees conversion increase only 10%, resulting in flat revenue and a 5% profit decrease. Same price change, wildly different outcomes.

You can't predict which scenario you'll face. You can only test and measure.

This episode dives deeper into the decision of whether to raise or lower prices, exploring data from over 1,000 price tests and discussing how margin profiles determine the best strategy for your business.

How Most Brands Decide Whether to Raise Prices

Most approaches miss the profit picture

When brands consider raising prices, they typically rely on one of these approaches. Each sounds logical but leaves you uncertain about the actual profit impact.

Cost-plus pricing: Calculate your costs, add your target margin, set the price. Focuses on covering costs but ignores what customers are actually willing to pay. You might be leaving money on the table or pricing yourself out of the market.

Competitor matching: Look at what similar brands charge and stay in that range. Easy benchmark, but you're optimizing for their business, not yours. Your competitors have different margins, ship from different locations, serve different customers, or might simply be wrong.

Revenue targets: Need to hit a revenue goal, so you calculate the prices required to get there. But revenue up doesn't mean profit up. You might grow revenue while compressing margins so much that profit goes down.

Gut feel: You sense that customers would accept a higher price based on perceived value. Maybe you're right. But there's a big gap between sensing and knowing.

These approaches all share the same flaw: they don't show you what actually happens to profit when you change prices.

Why Focus on Profit Per Visitor, Not Just Conversion

Only profit per visitor tells you if you're actually winning

Most brands obsess over conversion rate. When conversion drops, they panic. When it rises, they celebrate. But conversion alone doesn't tell you if you're making more money.

Here's what actually matters: Profit per visitor = (Revenue - Costs) ÷ Total visitors

Let's say you raise prices by 10%. Your conversion rate drops 9%. Disaster? Not necessarily. That same week, your revenue stays nearly flat and your profit margins improve from 60% to 64%. Your profit per visitor increases 6%.

You're making more money with fewer orders. Lower fulfillment costs, lower customer service volume, better unit economics. Meanwhile, your marketing metrics look worse. CAC increased because you acquired fewer customers. ROAS stayed flat because revenue stayed flat.

But your profit-adjusted ROAS improved. You're generating more gross profit dollars per marketing dollar spent, which means you can afford to spend more on acquisition while maintaining profitability.

This is why profit per visitor is your North Star metric. It's the only number that captures the full picture: conversion, average order value, revenue, and costs all rolled into one metric that tells you if you're actually winning.

What's the Simplest Test I Can Run?

Test higher prices and watch profit per visitor

You don't need to guess whether raising prices will hurt or help your business. Test it and know for certain.

This episode discusses the fundamentals of price testing, including the straddle approach (testing 5-10% above and below current prices), why profit per visitor is your north star metric, and how to iterate on your findings.

Step 1: Pick Your Collection

Start with your best-selling collection. High traffic means faster results. Established margins give you clear constraints. Meaningful revenue makes optimization worth it.

Step 2: Test Higher Prices

If you're selling at $100, test:

• Control: $100 (current)

• Variant A: $105-110 (+5-10% higher)

• Variant B: $110-115 (+10-15% higher)

Why test increases instead of decreases? Because most brands underprice. They're afraid of losing customers, so they leave profit on the table. Test up first. You might be surprised.

Step 3: Track These Metrics

Don't get lost in vanity metrics. Pull your analytics data and focus on four numbers that tell you everything:

• Conversion rate: How many visitors buy

• Average order value: How much they spend

• Revenue per visitor: Conversion × AOV

• Profit per visitor: Revenue minus costs per visitor (the one that matters most)

Step 4: Run for 2-3 Weeks

Give your test time to capture a full weekly shopping pattern. Monday might see different behavior than Saturday. Week one might differ from week two. Let patterns stabilize and tell a consistent story.

Step 5: Act on What the Data Shows

Look at profit per visitor for each group. The winner might surprise you. Sometimes higher prices with lower conversion drive significantly more profit. Sometimes they don't. But now you know instead of guess.

Common Mistakes That Keep You Uncertain

Don't let these pitfalls mislead you

Only watching conversion. Conversion is one input to profit, not the goal itself. A 10% conversion drop with 20% higher margins can increase profit per visitor substantially.

Testing too small of an increase. Testing $100 versus $101 won't give you clear signal fast enough. Test 5-10% changes to see patterns emerge quickly.

Not running the test long enough. High-traffic stores might see clear patterns in days. Lower-traffic stores need 2-3 weeks minimum. Don't cut tests short just because you're impatient.

Ignoring profit per visitor. Revenue per visitor can increase while profit per visitor decreases. Always measure what actually matters to your bottom line.

Testing during promotional periods. Black Friday behavior doesn't reflect normal shopping patterns. Run tests during consistent demand periods to get reliable insights.

Changing prices mid-test. You invalidate everything. Let tests run their course, even if early results make you nervous.

Stop Guessing. Start Knowing.

Most brands are terrified of raising prices. They worry about losing customers, damaging their brand, or falling behind competitors. So they leave prices unchanged and leave money on the table.

The truth is more nuanced. Raising prices might hurt your conversion rate. But higher margins can more than offset the conversion loss. Only testing shows you which scenario applies to your business with your customers on your products.

Find certainty in your pricing:

• Pick your best-selling collection

• Test 5-15% higher prices

• Track profit per visitor (not just conversion)

• Run for 2-3 weeks until patterns stabilize

• Act on what the data tells you

Don't guess whether raising prices will hurt your sales. Know!

Ready to discover what your customers will actually pay? When you're ready to know for sure, let's get you testing beyond what's typical.