If you’re ready to raise your prices without losing clients, I’ll explain how to do this successfully in this blog. Or you can listen to the podcast on the player above.
A new client has sparked this discussion. From working with me, she’s introduced packages for the first time and is moving away from the hourly rate. So some of her existing customers are not yet on the right structure yet and she needs to make a change in her business.
Why you need to raise your prices
If you are still charging hourly, your time is the most precious thing. If people are buying your time, they will be weighing up their investment against the time you are spending on the work. What we need to do to serve our clients and ourselves better is to start charging for the transformation.
We do need to take time into account. But it is the transformation that they are paying for.
It helps your client to:
- Understand the return on investment
- They know where they are heading and what they want to achieve
- They will reach their goals faster when they know where they are going – as they can see they’re moving forward
You are able to charge more for working this way because your client can understand the impact. And the full return on investment versus paying for your time.
Signs you need to raise your prices
One of the biggest indicators that you need to raise your prices is that you feel resentful for having to serve your clients. You feel like they are taking the life and soul out of you for very little money. When you feel like this something needs to change.
That change may need to be on your boundaries. You may be overdelivering and that’s what’s causing the resentment. Or it may be that they paid for less support and your boundaries over this are drifting as you offer other clients a different package.
It may be that you need to offer the extra package of support. Or it may be that you over-promised on your products. You have a couple of options here. You either charge more for that or you offer less support. There is a third option where you know that the impact of your expertise is worth so much more than what you are currently charging.
All of these factors that come into this. But we do not charge more simply for the sake of it. There are other options where you can bring more money into your business where you are not raising prices. However, most people are not charging enough for what they are doing.
Raise prices with logic
If you are going to raise your prices, you need to understand the reason as to why you are doing it. Are you charging high-ticket because the rest of the industry does? You need to understand the logic behind it. Plus, a clear assessment of what our products are offering, how we delivering, and what we need to do to raise those prices.
How to raise your prices
It mostly comes down to boundaries and communication when it comes to raising prices. You need to decide what your pricing will be. And if the product or service has changed or just the pricing.
You may want to charge the new price for any new client coming on board. In this case, it might mean discontinuing an old product or package. If we can make this a hard boundary, you will be taking your business in the right direction.
Moving current clients onto a new pricing structure
This where you have to make a judgment call. We all have clients that can be a pain. It is up to you to decide if they pay more or keep them on what they are at.
For example, you want to lose a client – this is a good opportunity. You set a hard boundary that you are finishing a product or service then you let them know you need to finish by a certain date. But you have a new product available that is at the higher price. It is highly likely that if they have been on a pricing point, that is their perceived value of you. Trying to get someone to pay more for something they are already getting is incredibly difficult.
You may lose customers as a result of raising prices but that can work in your favour. However, if you want to keep clients, you can keep them on the same deal just for them.
To honour the direction your business is going, then you need to put in a hard boundary. You can charge existing clients more but give them a special deal where they pay slightly less than others. The product can be different – more than what they were getting. And this is a good opportunity to show them what more they can get from working with you in this way.
This works as it rewards them as a loyal client. They can also see the return on investment from working with them in a new way.
You need to be clear about your boundaries before you communicate them to your clients.
You can use this hard boundary to your advantage. It can be a date that you set and gives people time to buy your existing product before it ends. But you may not want more clients at that level. If you don’t feel resentful about your pricing, then it generates urgency and makes potential clients take action.
Pricing is very personal. It’s different between business owners and for each situation. But it all comes back down to boundaries – what is negotiable and what is not. You can make the rules up. It is your business.
In the corporate world it is known as the PITA tax. A surcharge for difficult clients.
But we need to have integrity, reasoning and justification behind it. That justification can be that you know you’re worth so much more due to your expertise and experience.
Raising prices versus inaction
Overall, you may lose clients. You need to think about the future of your business and how you want to work moving forward. If you continue to hold onto a way of working that isn’t going to work for your business, then you are never going to build in the right direction.
By losing a few clients at this point, and gaining one at the new price, you will make the same amount of money and spend less time serving all of the other clients. It is about being brave but you can phase it out.
So how do you do it? You speak to your clients and let them know what’s going on and how you can still serve them. If you get referrals from other clients, they need to understand so they can refer in the right way. These need to feel good to you. If you feel resentful then don’t do it.
I always price for over delivery because I know I’m going to over-deliver so when it happens, I don’t feel bad about it. Make your new pricing something you feel good about.
One of the reasons people hire me is to look at their pricing and go through these decisions together. If you want to feel confident about raising your prices and communicating this, you can jump on a call with me and see how I can help.
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Thank you that was clear and useful.