3 reasons to put your prices up and how to do it if it feels too hard
The three questions many small businesses are asking themselves right now is; Should I put my prices up? How do I put my prices up? How much do I put my prices up?
I know that the thought of putting your prices up might feel uncomfortable. You might even think it’s impossible. Because we’re in the middle of an economic crisis right? If you want your business to come out the other side of this post pandemic shit show in one piece you need to seriously consider increasing your prices, sooner rather than later.
If you look around on any social media platform or new sites people are panicking about rising prices, the cost of living crisis, an impending recession and the price of fuel. For many small business owners this will have sent them careering into panic mode. They are slashing their prices, offering discounts, giving away free consultations, doing thirty minute discovery calls with time wasters and foot draggers. If you even suggested that they put their prices they’d gasp in horror. Most likely they’d look at you as if you’d just landed from Mars with Donald Trump’s head stuck on Gisele’s body (or even worse, the other way around).
They’ll come back with protestations like “people aren’t buying” “people have less money” “my competitors will do it cheaper, I’ll lose business”.
I put good money on those same people being out of business, overworked, stressed or suffering with a serious mental health issue in the next 12 months. Giving discounts and reducing your prices means you are working harder, for longer for less. But the grim financial reality means many are stuck between reducing their prices and giving discounts because they think it’ll be easier to sell and those who have to consider putting their prices up to keep up with their own costs. The main stressors around putting prices up is the fear that you’ll put prospective clients off or lose the ones you’ve got.
If you put your prices up how do you do it and how much should you increase your prices by? Hopefully this blog will answer those questions.
There are 3 compelling reasons to increase your prices;
- Better clients
- Better work
- Better life
Better Clients
Cheap prices attract cheap clients. Higher prices qualify clients. People who want to pay less are less interested in quality and more interested in saving money. They are harder to please and worse to work with. Higher prices mean it’s harder to work with you which means that when someone agrees (and does) pay you it’s because they REALLY want to work with you. They value your service, they respect you and they respect your time. Freebie and discount hunters get what they pay for. What you get is people who drag their heels paying invoices, don’t pay at all or ghost you.
Better Work
Charging higher prices means you’re able to do better work. Better work means more referrals, more word of mouth and more return custom. Acquiring a new customer can cost five times more than retaining an existing customer.
If you’re not paying for ads the chances are you’re spending a significant amount of time promoting your business on social media, blogs, emails or newsletters. You might not be paying for that traffic but it’s costing you money in time and opportunity costs.
Putting your prices up means you can afford to take on fewer clients. Fewer clients means that you have more time to service the clients you have. You have more time to work on your business instead of in it (on social media or admin). And on point one; better clients, wouldn’t you rather spend less time working with lovely people than every minute you have with utter dickbags who don’t respect you?
Better Life
Are you running your business or is your business running you? Inconsistent income and high bills means many freelancers and coaches are making every day decisions based on fear. Fear of not having enough, fear of losing what they’ve got. They are churning out new offers, new promotions and creating endless content all day every day. They’re worn out, fed up and stressed to the eyeballs. The thought of getting a 9-5 job is as depressing as their reality so they are stuck between a rock and a hard place.
Increasing your prices gives you breathing space. It takes the financial pressure off you, gives you time and headspace. Instead of chucking out offers right, left and centre because you’ve got a bill to pay or a birthday coming up you have proper time and space to think about how to grow your business strategically. Instead of hating every minute of your work, your clients and your business you only do work you like, when you want to do it with people you like.
How do I put my prices up without losing all my customers?
In your business you make the rules. You can increase your prices incrementally or you can just put them up. It’s up to you. There’s a good chance you will lose clients when you increase your prices but that’s only a bad thing if you decide it is. If they aren’t able or willing to pay your new prices then they aren’t going to be the clients who help you move your business into its next phase.
I once had a client who was most put out that I had increased my prices. They told me that before I increased my prices I should have contacted them to discuss how I could demonstrate and justify the price I wanted to charge and the value I brought to their organisation. They seemed to be labouring under the false misapprehension that a) I was their employee and b) that they had a say in my strategic business decisions.
Your prices work as a filter; less than ideal clients reveal themselves very quickly and you don’t want to waste a second of your time working with anyone who is less than a dream client. Your business is moving forward, not everyone can or will come with you on that journey.
You could keep all your current clients on their existing rates and introduce a new price point for new clients or you could put everyone’s price up by a percentage. Base your prices on what you want to earn, not what you think people will pay.
How much should I increase my prices by?
If you can’t get your head around increasing your prices you could just add on £50 to whatever you’re currently charging. Then next month add another £50 and keep going until you’ve hit your income goal. If you’re at capacity and can’t take on any more clients, that’s a big flashing neon sign that it’s time to increase your prices.
You don’t need anyone’s permission to put your prices up, certainly not your prospects. We’d all love to be driving expensive cars but we don’t expect the car manufacturers to make those glorious vehicles affordable to us. Instead, we need to create a business that meets our financial goals.
It is not your responsibility to be affordable. It is your responsibility to clearly explain why you think you’re worth the price you ask and demonstrate to the right people the difference you can make to their lives, health or businesses. If you still want to work with people who can’t afford your services, for every ten paying clients work with someone pro bono. The point is you can’t and won’t do your best work and change lives if you are constantly worrying about how you’re going to pay the bills each month.
I help small businesses get clear on their messaging. Social media, websites, blogs, ads……none of those work unless you know exactly who you’re talking to, what they want and need and what your message is. I work with coaches, consultants and freelancers to connect with their ideal client and create content that turns into clicks. If you’d like to find out how I can help you email me at clair@upwriteonline.co.uk