Steps to Increase Your Prices (Without Losing Clients, Freaking Out or Feeling Guilty About It)
This is a question I get asked all the time and in my experience, one of the main reason is that many women do not value the service that they’re offering. This undercharging is predominately due to their their lack of confidence.
This happens to all of us. Even me, when I first started coaching three years ago, I charged $30 per session for my coaching. I thought that was fair, until one day a friend asked how many hours was involved in preparing, running and finalizing notes for the session. It was on average 4-5 hours and then she asked me how much do you think the guy at McDonald’s gets paid. I was shocked to realize that I was making less than that.
It was hard to admit that even though I had a double degree, international experience profile, fast growing career in a fortune 500, I just didn’t think that my coaching was worth it. Until I started to have the feedback and gradually through time I slowly kept increasing my rates. The amazing thing is that my clients didn’t have an issue with that.
Most new business owners start out small, with low rates just like what I did in order to gain as many customers as possible. However, there comes a time when the demand starts exceeding supply and you realise that you’re not making the amount of money you should, because you are just not charging what your worth. That’s when you realise that you have to increase your rates if you want your business to survive. But will your business survive if you increase your rates?
How many clients will you lose if you increase your rates? Is it worth it?
If you give value to your customer and they can afford it then they are willing to pay. For example, if your clients are making $5000 a month and you want to raise your rates from $1000 to $1500 you might lose some of your clients if your service is not an essential one as this will take up 1/3 of their salary. However if your clients are making $10,000 a month they might be less likely to change, because if they love your product they would continue to buy.
You may not have the confidence to raise your prices either. The main reasons why you may fear increasing your rates include:
- You have lost your believe in your value-added proposition.
- You lack confidence in your sales team’s ability to close.
- You believe that your clients buy only on price.
You need to find a good way to increase your rates. You want to earn what you are worth, while providing value to your clients (to ensure they don’t baulk and go elsewhere!). You want to do this without feeling guilty and freaking out.
Here are my top 3 steps for increasing your rates without losing clients, freaking out or feeling guilty about it:
You must understand that it’s really okay for you to increase your rates, provided you offer value. Here’s how to do it:
3. It’s all the the presentation
The cellphone industry started it and now all businesses are doing it. Why? Because it WORKS.
I’m talking about bundling product and services together. Bundled products are often perceived as more valuable, because you have to a apply a small discount. However, bundling together related services or products has been proven time and again to increase revenue.
Clients who opt out of the bundle will probably notice the slight increase, but they will be unlikely to go to another supplier. They will either choose the bundle or the individual product and either way, they will feel that they are saving money.
It’s time to start tooting your own horn. You know about the value you add. You know that your brand is a leader in the industry. You know the benefits you offer over the competitors and you have a list of testimonials and letters from customers who love your products and services. Use that knowledge to your advantage.
- Put the testimonials on your website.
- Put industry recognitions and partnerships on your site.
- Mention the advantages on your site (without slaying the competition).
Now take all that information with you when you’re pitching a client and present, present, present. Most businesses don’t pitch the full package and as such lose out on valuable clients.
1. Pin down your target market
The one mistake most new businesses make is to think that everyone needs what they have to offer. Of course we all do that in the beginning… But when it comes to increasing your rates and becoming a respected brand in the marketplace, it’s time to establish
your target market. By all means market to the general population, but do allocate some advertising $ to your ideal target market.
Increase Your Rates Take-Away
We think of starting with entry-level rates as a mistake, but let’s face it – few people will buy from an unrecognisable brand charging high prices. It only makes sense that as a business grows and especially as its reputation grows, rates will have to increase to accommodate service and value proposition.
You are in business to make money – it’s not a charitable organisation.
Increasing your rates requires you to have a mind-shift
The Key to increasing your rates is to have the right attitude about it. Don’t think “If I don’t increase my rates, I’m doomed” and don’t tell your customers that you have to increase your rates due to inflation. No no no!!! Think about the messages these thoughts send to you, your sales team and your customers…
1. Don’t ask questions. Your staff and customers don’t have to answer to the bank manager and it’s in their interests for you to keep your rates as low as possible. Make an executive decision and inform them about it once you have it all worked out.
2. Be clear: Announce the increase in writing, offer choices and add value. Show the customer how he benefits through additional support or service, more content… Whether it’s something you’ve done all along or whether it’s something new – let them know.
Remember that new customers are not aware of your price increase, so don’t pitch them on that. Smply share your value proposition with them. You only have to pitch your increase to existing customers. Be bold, don’t apologise and ABC – Always Be Closing.
Do you have any interesting tips and advice on increasing your rates? Have you recently increased your rates and how was it received? Please share with us!