How Many Customers Can You Lose After Raising Prices?
Higher revenue per customer can offset some lost sales.
Core formula
Revenue break-even loss fraction = price increase rate / (1 + price increase rate), assuming equal spending per customer.
Example
At $50, 100 customers generate $5,000. At $60, 84 customers generate $5,040, while 83 generate only $4,980.
Revenue versus profit
Variable costs may decrease when fewer services are delivered, so the profit calculation can produce a different threshold.
Use cautiously
The result is a mathematical threshold, not a forecast of customer behaviour.
Revenue break-even reference points
At a 5% increase the theoretical allowable volume loss is 4.76%; at 10% it is 9.09%; at 20% it is 16.67%; at 25% it is 20%.
The percentages are continuous. For whole transactions, calculate previous revenue divided by new price and round the required count up.
Do not confuse customers with orders
One customer may make multiple transactions. If repeat frequency changes, the customer-loss percentage can differ from the transaction-loss percentage even when revenue is unchanged.