Margins Shrinking? This Is Your Easiest Fix

Margins don’t often vanish overnight. Instead they are allowed to slowly shrink away, eaten up by rising salaries, creeping software costs, and the hidden inefficiencies of delivery.

As we enter quarter 4 and start making plans for 2026, your top line forecasts need to be built on the right combination of realism and learnings.  

The first instinct is to grow via selling more, chasing top-line revenue, but building in this year’s margin, or even a depressed margin built on trends.  However, selling more at the wrong price only deepens the trap.

Instead, the simplest and fastest way to restore margin isn’t more projects and work. It’s smarter pricing.

What can we learn from Apple and Starbucks

Apple’s new iPhone 17 launched just weeks ago. When it was unveiled in September, the starting price was higher than many analysts expected. Yet demand was still very strong.

Why? Because Apple isn’t just selling a “phone.” They’re selling a promise of performance, durability, ecosystem, and design. Customers pay the price they are asked, without complaint, because they believe they’re buying something bigger than the phone itself, and so the higher price feels completely justified.

It’s the same lesson you see when you see people queuing in Starbucks to pay three times the price of a high-street coffee. They don’t believe the beans cost more. They are paying because they know there is the consistency, comfort, and a wider brand experience in their “third place” between home and work.

In both cases, the product is less important than the outcome customers feel they’re buying. And that’s exactly where service businesses often leave money on the table: they charge for effort, not outcome.

Why Pricing Really, Really Matters

• Fact 1: Customers don’t buy hours – they buy outcomes.  Charging by time or effort is always vulnerable: you’re competing with cheaper alternatives and commoditisation, and risk being sucked into a race to the bottom.
• Fact 2: Costs creep over time. Inflation, staff pay, tools, software all go up.  If your prices don’t, the only conclusion is your margin erodes invisibly.
• Fact 3: Pricing signals confidence and positioning. A rate that’s too low can imply weak value, which attracts price-sensitive (not value-sensitive) clients.
• Fact 4: You are in absolute control. Market demand, competition, and macro trends can’t always be shaped. But your pricing can be.

The Impact of Underpricing

• A modest 5–10% increase in fees can produce 20–30% uplift in profit if your costs are under control.
• Low margins reduce room for error, making it harder to invest in quality, tools, or backup capacity.
• You force the business to rely on ever increasing volume, (more clients, more work, more risk), instead of healthier margins.
• Teams feel underpaid relative to output and overworked relative to reward, and you have little margin to solve that issue.
• Clients that pay low rates often demand more, push harder, and complain louder, sucking away at margin even further.
• You inevitably get pulled into non-scalable, high-effort tasks to maintain revenue, losing strategic bandwidth.

Using a CFO view on Pricing

• The key is to use pricing as a lever without actually losing clients, the subtle, simple, but important shift is to transition the conversation away from inputs and into one on outcomes.

  • Anchor to Outcomes: Price what clients achieve via your product or service, not the costs or hours required to deliver.
  • Segment your Clients: Some are price sensitive, but others will be primarily value driven. Assess who fits into what category and then raise selectively, not universally.
  • Signal Value: Position price increases as a reflection of your higher standards, better delivery models, or increased exclusivity.
  • Pilot First: Test options in new proposals to gain valuable feedback on how the pricing lands before rolling out broadly.
  • Package & Bundle: create packages that frame the whole value story and stay away from per unit billing.

  To get moving, why not look at your next proposal and quote it 5–10% higher. Heading into 2026, you should also identify your lowest-margin client and prepare a reset conversation before year-end.  Finally, consider preparing a one-line value statement that justifies a price rise; e.g. this service gives you the best in market reporting and data, or delivery times will be halved via this service. 

  Overall, be utterly transparent: explain to clients why pricing is changing, and tie it to the improvements they’ll see simultaneously.

Closing Thought

Apple’s pricing move with the iPhone 17 shows us something important: Consumers (and clients) will always pay more, as long as they believe in the promise behind what they’re buying.  For agencies, the question isn’t just “can I raise prices?”, it’s “how do I make an increased  price feel not just acceptable, but necessary?”

Used well, pricing is your strongest growth lever, not because it adds money, but because it clarifies value.