Today, I’ll answer a listener question about pricing. Callie in Amsterdam asked “When should you raise your prices?”
Excellent question, Callie and thanks for leaving us a voicemail.
In light of my conversation with Certified Financial Planner Lisa Linfield earlier this week, there is a simple answer to this.
There are a few key questions you need to ponder before raising your rates. This applies if you’re an event planner, a photographer, a graphic designer, or if you’re in a different industry.
Let’s simplify this topic using 3 simple questions…
- When you should raise your prices
- And just one final whisper, from me to you, dear friend… come in closer.
- If this thought of the day inspired you…
- Send me a voicemail to get featured!
- Watch the video version of this episode
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When you should raise your prices
1. What is the market doing?
While I’m not telling you to spiral down the negative pattern of comparison, I am urging you to check-in to see how your direct competition are pricing themselves.
As a quarterly exercise, this can be a simple research project which will include:
- Scouring competitor websites
- Taking note on a spreadsheet of what their current product and service offerings are
- If your competitors list their starting prices, are they inline with what you’re charging these days?
Remember, not every wedding planner in your city is your competitor. For example, the gal offering to plan an entire wedding for $500, is not playing in the same sandpit with someone who produces luxury weddings at $20k.
The same applies in your industry too. Think about the 2-3 firms that you know for a fact you are losing business to. How are they positioning themselves in the marketplace and what is their price point?
Do your research
And do it ethically. So, do not call them up and pretend to be a fake client. EW. There’s a whole lotta NOPE there.
Review their websites quarterly or better yet, befriend your competitors. Take them to lunch, talk shop and then refer business that isn’t a fit for you, to them. That’s where the magic truly happens.
A perfect example of this that comes to mind is AWPA, the Associated Wedding Planners of Austin. These ladies realize the core tenet that ‘A rising tide lifts all boats’.
In following this tenet, they are raising the standards and practices for the wedding industry in their city. So, do the thing and build a relationship with your competitors.
2. Are you ready to step up your game?
Ok, brilliant. You’ve now identified that the market can bear your prices going up. In fact, if you’ve not done this exercise in a long while, you’ll find that you may have been undervaluing your awesomeness.
The market is MORE than ready for you to step up your game. But are you?
See, here’s the real T… you can’t simply tell your existing clients that your pricing are going up and that’s it. You’ve got to also show them why the price is going up, illustrate what more they are getting for their money, and how this price adjustment is going to simplify their lives.
You can’t just raise your prices and not step up your game. That’s the fastest way to lose your entire client base! Instead, think about ways you can improve and refine the products and services you provide. Here are a few ideas:
- Better packaging
- Cleaner graphic design
- Easier-to-use tools
- More customer support
- Faster turnaround times
- Or maybe you’re adding new people to your team which makes their lives easier
Show me WHY I should continue to work with you at this higher rate. That will continue to reinforce the trust and respect they have with you, and your working relationship together. No one wants to feel ripped-off.
3. How are you going to roll this out?
Look, I can tell you from firsthand experience, running my own business for 16 years how NOT to roll out a price increase to your clients. I’ve had quite a few vendors and service providers flub this crucial detail up over the years. Don’t be like them. Here’s how to do it instead.
Map it out on your cash flow forecast
Do you have enough revenue coming in between now and when the price goes up to float things? If not, what sales promotions do you need to run now to carry you through? What percentage of your clients are you going to lose when the prices go up? Have you got a plan for that?
Give 90 days notice
Just like you, they’ve got to map out their cash flow, as well. Be kind and give your clients at least 90 days notice that your prices are increasing.
Again, show them the benefits of what more they are getting from you when this happens. Reassure them that this is a good thing for both parties, and schedule in time to speak about this.
If possible, do this in-person, well in advance. No one likes surprises, especially not ones like this. And please, don’t do this via email!
Weave it into your marketing plan
Sure, you could quietly raise your rates on your website without telling anyone. That works fine if you don’t have any existing clients. But I would highly recommend weaving this communications in to your pre-existing marketing plan. Consider these points, too:
- What are you saying on social media?
- Is there a Facebook ad campaign that supports this?
- Is there a special sales push just before that allows prospects to lock in the old rates before they change?
Be intentional, be strategic and for God’s sake, be transparent.
This goes for your clients. your email list, and your followers. Tell them why and when the prices are going up. They’ll respect you more for it later. And the ones who leave – that’s totally fine as well.
And just one final whisper, from me to you, dear friend… come in closer.
I know it’s scary to put yourself out there and say, “Hey world, I’m worth more than this!”
It takes massive amounts of courage to add another zero on to the end of your rates and then to confidently stand in that price.
I get it.
And yes, you are worth it.
If the market can bear it, and your skills are truly helping to solve a pain point in your Ultimate Ideal Client’s lives, then go for it.
It’s time to raise your prices.
But please, dear friend. Be strategic about how you roll this out. Don’t blindside your beloved clients or double your rates out of the blue. This requires you to be bold, to push past any money mindset blocks, and charge what you’re worth.
But don’t forget that your clients are human, too.
Show them the benefits of what they get when they pay you more. How this will ultimately help them. Be transparent in your pricing. Heck, be like Ethical Hour and write a manifesto for your business if you feel called to do so!
If you follow my three simple suggestions, you’ll save yourself a world of hurt, doubt, and unnecessary back and forth. Because when you jeopardize the two critical pillars of trust and respect, you stand to lose everything.
You can do this, I believe in you.
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