Raising Your Prices Without Breaking Your Heart
After you've been in business for a while, you start thinking about whether you should raise your prices. Sometimes this happens when one year ends, and another is about to begin. Other times, this happens when you realize that you've been working for the same rate for a certain number of years, and you're thinking it's time for an increase.
It can be an agonizing question. You want to be paid an amount that feels good and supports you well, but you also don't want to alienate people or shut down your business.
And it's not an idle question. You can raise your prices too much and see "die off" from your active customer list. By the same token, you can continue to under price yourself, and that keeps people away, too, and may keep the wolf at your door.
What to do? What to do?
A Few Words about Pricing
First, raising your prices is inevitable. Maybe not every year, maybe not even every other year. Are you paying the same price for shoes that you did in 1984? Prices go up.
I'm also guessing that you may not be taking into account the true price of your offers. Ask yourself these questions:
- Do you only account for your time in front of a client?
- Do you omit accounting your time for administrative, marketing and prep time?
- Do you omit time for continuing education or self-development?
For every client hour, there are 1-3 hours of additional time needed to really care for your client.
Okay, I think you're getting it. You probably know whether your prices really need to inch up a bit or not.
Is It a New Offer?
If you are about to launch a new offer and are struggling with how to price it because it is radically different then any other offer in your business, think about this:
1) make it easy for new people to buy, and
2) make it significant enough of a price so that it felt good and you can keep offering it.
Comfort and Stretch
If it's a new offer you've never made before, find the price you're comfortable offering and stretch just a little bit. My experience has been that the price you are completely comfortable with in theory will probably feel too low once you actually start engaging with paying clients.
So stretch a little bit to avoid needing to raise your prices two weeks later.
A Little Pricing Trick.
There are pricing ranges, where one price feels very similar to another. For instance, whether I spend $16 or $19 on something won't really affect my purchasing decision, but the extra $3 multiplied by 10,000 sales may help out the business tremendously.
For instance, if you offer a service and it is priced at $180 and increased to $195, the price is familiar to the buyer, but represents a $15 per client increase. If you have 30 recurring monthly clients, times 12 months, this means an extra $5400/year.
You can jump from one price range to another, for instance from a $150 service to a $300 service, but that would require a step up in your marketing and how you describe your service.
As you sense into your next price, see how far you can go in your own heart while staying within the "price range." It's all a little subjective, so don't worry about hard-and-fast lines, they don't exist. Just feel into it.
While raising your prices is never an easy decision, these suggestions will, hopefully, make it easier. Remember, money is a symbol of the energy that flows within a business relationship, and being paid better may mean you can do more great work.
By Mark H. Silver
Photography by Nolte Lourens
Mark Silver, founder of Heart of Business, helps microbusiness owners build a bigger business without losing their heart. Get effective business practices through his widely read and acclaimed newsletter. Please join at http://www.heartofbusiness.com/new-here