How do you know when to raise your prices?
This is a puzzle for business owners everywhere, regardless of what your business is.
I’m sure you’ve wondered this from time to time. It’s a question that arises frequently in the many conversations I have each day.
My answers differ for each depending on their individual situation, their industry and their stage of business.
If this is your question too, here are some things to consider.
When you’re new to business, starting a new business, or offering something different in your current business
In these circumstances, there’s sometimes merit in offering your new service at a lower-than-desirable amount initially. This serves to:
💜 boost your confidence that people will invest in you and your new service,
💜 give evidence your service provides the outcomes you promise, and
💜 get testimonials from happy clients.
I recommend you limit the number you offer at this low investment level and then increase your fee incrementally.
Within your existing business
In an existing business, it’s necessary to raise your fees periodically. There are multiple reasons for this that include:
💃 Your costs of doing business increase
These increases include rent, utilities and your service providers for example banks, lawyers and accountants. They need to be passed on to your clients otherwise they cut your profit margin and reduce the money that ends up in your back pocket for the work you do. My advice is to keep a running tally of the cost increases your business is absorbing so that when you review your fees you make sure you pass on all these increases.
💃 As your skills and experience grow and develop, your services become more valuable to your clients
Think here of the difference between a massage therapist freshly graduated compared with one with 20 years’ experience and continuing education; and a recently certified coach versus one with over a decade of experience, professional development and growth.
Simply put, the more experience you have the more you need to charge for your services. When you employ staff, this happens with wage reviews and promotions; as a service-based business owner you are no different.
Both setting fees and raising them are confusing issues for entrepreneurs. When I work with my clients, they’re inevitably part of the intuitive strategic plan we create so they no longer confuse.
If you’d like some help with this issue, give me a shout, I’ll be happy to help you out.