We offered competitive prices to customers in the first year. My margins were low, but while the customer count grew I wasn't making a profit. In the second year, costs piled up, and suppliers raised prices by 20%. We had to raise our prices too, but we told customers it was only a 15% increase.
The responses came immediately: 'Why did you raise it?' 'I found it cheaper elsewhere' 'We've worked together for three years is this how we start?'. Some long-term customers went silent. They probably switched to someone else.
Result: customer count dropped by 30% in the first month. But margins increased, and the remaining steady customers turned out to be permanent and loyal. Profitability with these 70 customers was better than with the previous 100. However, it breaks your heart to lose long-term customers.