How long is it since you last reviewed and raised your prices? If it’s been more than 6 months then it’s time for a review.
I wrote an article recently on how to charge what you’re worth (read it here), in which I talked about the fact that we all, as consumers, expect prices to increase a bit year on year to keep up with inflation. Therefore if you’re not reviewing and raising your prices regularly (ie. Annually or bi-annually), then you’re effectively giving yourself a pay cut each year!
But there are other reasons to consider a price increase, such as….
Positioning your business in the marketplace to better attract your ideal clients. The majority of consumers don’t make buying decisions based on price, they buy based on emotion & value – an experience, a feeling, a level of service, and you may be surprised that once you really get to know who your ideal clients are, that your low prices are actually putting them off.
Low prices usually equates to low expectations, we’ve all heard the old adage “you get what you pay for”, so if we’re buying cheap we’re usually not expecting great quality. Now whilst that’s fine for some businesses, if you want to build a reputation for being great at what you do, you may find that your low prices, and the perception this creates with a prospective customer, is actually working against you and the reputation you’re looking to build.
If I’m on trial for a murder I didn’t commit, do I want the lawyer who charges £50/hr or do I want the lawyer who charges £500/hr if my freedom is hanging in the balance? Even without knowing anything about the experience or knowledge of these 2 lawyers, we infer from the pricing that the 2nd lawyer must be better at their job because they’re able to command a much higher fee. They win the business largely because of the high price they charge.
So once you really know your ideal clients, make sure that your pricing is appropriate for them and their wants, and not contradicting the image you’re looking to create, many people actually don't want to buy the "cheapest", but they do want to buy great value.
It’s also important once you’ve defined your company values to make sure that your pricing supports you in delivering those. Often clients identify one of their company values to be delivering an exceptional customer experience, which is great, but is something that takes time and attention to deliver. If you’re currently charging a rate which means you have to take on too many clients just to earn the wage you want, it may simply not be possible for you to deliver an exceptional customer experience because you don't have the time. If great service is important to you and your company, then make sure you’re factoring it in to your prices, and that may require a price rise.
In fact, raising your prices is one of the easiest ways to instantly offer a better quality service and client experience. If you feel that your client experience is currently sub-standard then it’s probably time to do a complete business overhaul, part of which may include raising your prices, so that you can deliver your service/product properly to a lower number of clients where you deliver maximum value.
Ironically it can also become easier to generate sales at a higher price than at a lower one, the lower priced you are the more likely your business is to attract clients for whom price is a big buying influence, which can often be when clients try to haggle over prices and beat you down even further. This can be an uncomfortable conversation to have and can leave you feeling jaded and un-valued, and can often lead to a reluctance around sales. Whereas at the top end of the market clients are rarely buying based on price, but instead tend to place a higher value on service, experience and quality, which are easier to compete on (especially if you know you’re being financially rewarded to do so!) Working with these clients at the higher-end of the market becomes more about branding, values and relationship building, you have more flexibility to offer a tailored/bespoke service to make sure you can solve a clients’ specific problem/need and therefore close the sale easier and deliver a better client experience in the process.
So there you have it, plenty of reasons to consider raising your prices – you may even find it actually attracts more sales! If you're looking to generate more sales and significantly grow your business over the next 3-6 months then book in a call with me here to see how I can help you achieve that.
Happy selling, speak soon