By Ashish Rai, CEO, Purple Circle · October 2026 · 8 min read

You’re not making more profit after raising prices because a price increase only works if conversion doesn’t fall too far, and most brands accidentally undo it. They add a coupon to “recover volume”, or let conversion crash because nothing on the page justifies the new price, or attract more COD orders that never get accepted. Meta then charges more for each order. In the example below, a kurta set goes from ₹1,299 to ₹1,499 and monthly profit falls from ₹1.11 lakh to ₹0.72 lakh. Done properly, the same increase takes profit to ₹1.76 lakh.

Raising prices feels like the most grown-up decision a founder can make. You’ve read the posts. You’ve done the margin math. You change ₹1,299 to ₹1,499, sit back, and wait for the money.

Then the month closes and profit has gone down. Not flat. Down. Like a cat that does the opposite of whatever you just asked it to do.

Meet the four founders

Same kurta set. Same ₹3 lakh monthly Meta budget. Same factory, same courier, same everything. Four different ways of handling one price change. This is an illustrative example, not client data, and all prices are net of GST.

The Panic Couponer raised the price to ₹1,499, watched orders dip for three days, and added a 15% coupon. Congratulations: they now sell at ₹1,274, which is ₹25 less than before, with extra steps. Every order makes less money than the original.

The Brave-Then-Broke held the line at ₹1,499, respect. But nothing on the product page changed, so the new price felt random. Conversion fell 25%, Meta started charging more per order, and the “let’s just see it” COD crowd pushed RTO from 22% to 26%. A ₹200 increase, and ₹39,000 less profit for the month.

The Grown-Up raised the price to ₹1,499 too, but gave customers a reason: fabric close-ups, a proper fit guide, real reviews near the price. No coupon. A small prepaid incentive. Conversion slipped 8%, and monthly profit went up by 59%.

The math behind it, per delivered order

This uses the same CM1, CM2 and CM3 levels from how to choose apparel products using CM1 and CM2. Product cost is ₹420. Shipping and packing is ₹100. Payment fees are about 3%. Each RTO costs ₹180 in shipping both ways, spread over delivered orders. Size exchanges cost ₹22 per delivered order. Meta spends ₹380 to win an order at the original conversion rate.

Look at the Brave-Then-Broke column. CM2 went up by ₹182 per order, a genuinely better product margin. Then ads ate it. When conversion drops, the same daily budget buys fewer orders, so each one costs more. Meta does not give you a discount for being expensive.

Why price increases backfire

How much conversion can you afford to lose?

This is the one number to work out before touching any price. If your monthly ad budget stays the same, a price increase pays off only if your conversion drop is smaller than this:

Run this before the change, then watch conversion for two to three weeks after it. If you’re drifting toward the limit, fix the product page before you even think about a coupon.

How to raise prices without the drama

Mistakes that turn a price rise into a price fall

FAQ

Why am I not making more profit after increasing my prices?

Usually because conversion fell further than the extra margin could cover, because a coupon undid the increase, or because more COD orders turned into RTO. With the same ad budget, fewer orders means a higher ad cost per order.

How much can conversion drop before a price increase stops paying?

Work out 1 − (old CM2 per order placed ÷ new CM2 per order placed). In our example, a ₹1,299 to ₹1,499 increase pays as long as conversion falls by less than about 22%.

Should I offer a discount after raising prices?

Not straight away. A 15% coupon on a ₹1,499 price leaves you at ₹1,274, below the old ₹1,299. Give the new price at least 60 days, and use bundles if you need a sales push.

Will raising prices increase RTO?

It can on COD orders, because more people order to “see it first”. A small prepaid incentive and order verification before dispatch help keep RTO in check.

How do I raise prices without losing customers?

Start with products that already sell well, improve the product page so the price makes sense, test one product first, avoid coupons for a while, and judge the result on profit per order, not order count.

— Ashish Rai, CEO, Purple Circle