Do You Ever Wonder If And When It’s Time To Raise Your Prices?
When to raise prices is a topic many of my clients struggle with.
Typically, you should raise your prices anywhere between 5%-10% every year or year and a half. That sounds like a lot, and it can be.
You have to take into consideration your demographic, your expenses, your brand, your investment in education, the demand for your services, and how far you are scheduled out in advance.
There are 4 key indicators it’s time to make an adjustment to your pricing.
- One of the first indicators it’s time to raise your pricing is when you’re not covering your costs. This seems obvious, however, many people don’t factor in all the costs associated with delivering their products/services. When’s the last time you took a hard look at this?
- Have your clients ever told you “You don’t charge enough”? If so, it’s time to make a price increase. Your clients shouldn’t have to tell you this, yet many of us have found ourselves in this same situation. Keep in mind, raising your prices isn’t about being greedy or taking advantage of people. Charging a higher price will result in them taking your work and suggestions more seriously. From another perspective, clients may not think your product/service is as good as it actually is because the pricing is lower than that of competitors.
- Do you ever feel underpaid? Many people resent doing certain work with customers because they’re not making enough. The hard truth is, they only have themselves to blame. When you set up your own pricing and offerings, it’s your responsibility to make sure it’s worth your time.
- If you are booked out for more than 3 weeks, it may be time to have a price increase.
If you’re exploring ways to raise your prices, consider one of these strategies as a way to begin the process.
- Break out fees formerly included in the price and keep the base price the same raising some of the smaller fees, such as the shipping charge.
- Bundle additional value into the product in order to charge a premium
- Shrink the offering and keep the price the same
Whether you are only increasing a few of your products or services or all across the board, here are some important things to remember:
Communicating a price increase to customers is never a pleasant task. It has the potential to stir customer service complaints, social media outrage, or simply lose customers altogether. Ensure you communicate your increase clearly to your customers explaining the reason and giving them at least 30 days notice and a chance to place an order at the old price. Post it on social media or send them an email newsletter. Also, ensure you update your website.
2. Always Thank Your Customers
When advising clients of a price increase always start by thanking them for their service. Be sure to show them how much you appreciate them. It is after all, because of them that you are able to put your prices up.
3. Add Value
When you increase your prices, think of a free gift or service you can add to increase the value. Clients will be less likely to feel uneasy about the increase in price.
Increase Your Prices Around the Holiday Season. It truly is the best time. People are used to spending money at this time and are less likely to question the increase.
5. Increase your prices with confidence
When asked why you’ve increased your prices, don’t get nervous, start making excuses, and apologize for it. Explain that with the cost of inflation and education, it is very important that you continue to invest back into yourself and your business. And that you want to continue to provide your customers with the absolute best experience possible.
Price generates revenue, so arriving at the correct price is vital to the success of the business. However, there is no one magic pricing strategy that will guarantee success, so a company should be constantly researching the market to identify a correct policy for its product or service.
Each year, be sure to look at your pricing and your business’s financial health.
Remember that failure to increase prices when you can may result in a revenue crunch when you need your business to scale.
Raise prices when necessary, but don’t be greedy. While it’s important to make a profit, any increases in your pricing structure should be defensible. Otherwise, your customers will see you’re just trying to more of their money, and end up not wanting to do any business with you in the future.