Increasing your prices is one of the most overlooked ways of increasing your revenue. Doubling your prices, or even increasing them by 10-30%, can add a significant amount to the top and bottom line.
But, pricing is one of the most vexing topics for women with service businesses. You don’t want to charge so much that you spend your conversations justifying your price. But at the same time, you don’t want to price yourself so low that clients think that you aren’t valuing your services.
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Not only that, if your business model shows you working one-on-one, then you need to be charging enough per client so that you can still stay in business and continue to do good in the world.
There are a few things to consider…
When you set your prices
Forget everything that you ever know about pricing based on comparison with your competition, your profit margin or your time. None of these things matter to your clients.
Your clients don’t care how much it costs you to service them. Or how much you have invested in learning and developing that skill set. They don’t even really care how much you are versus your competition.
They only care about the results that you are able to help them achieve. The more pressing the problem that they have, or the more incredible the result that they achieve, the higher they value your service. And the more they will pay.
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You need to charge enough
Charging more helps both you and your clients.
Charging more helps your clients take the work seriously. They come to the table with ‘skin in the game’. They do the preparation work. They do the homework. They value their transformation and the investment they have made to make it happen.
Charging more also helps you because you earn fabulous money that gives you a sense of self-worth and confidence. It also helps you to step up and deliver a service that is worth that much.
I use a strategy with my clients to identify how much value they provide, and from there, figure out what their prices should be. If the prices end up being too low to support their income requirements, then I help my clients identify how to better add more value. And then, it’s time to raise your prices.
When is it time to raise your prices?
There are three major times when you should look at your prices.
- When price rarely comes up as an objection in a selling conversation. If your clients are buying your services without mentioning your prices, then you are on the low side. If you are in a business where you don’t have a formal price list, try raising your prices by 15% or more as an experiment. If the next 4 out of 5 clients accept the price rise, then this is your new price from that time forward.
- When you introduce a new service or add more value to your offering. Have a look at your current offering. How can you add further value? What could you do that would strengthen the results that your clients get? Note: it’s very rarely ‘work harder’ or ‘deliver more face-to-face time’. It might be a home study course, or being comp’d into a lower priced offering, or an annual checkup. Consider adding this to your offering, and shift your price to accommodate this.
- On a regular basis. If you haven’t raised your prices for 4 years, it’s time to have a close look now! Chances are the market has moved, and you are now on the lower end. Consider if you have the same client base, or if this has shifted. Are clients starting to consider you as a commodity, or are you still adding significant value?
If you look at these, and you believe that none of these situations will allow you to take a price increase, then have a good look at your business model. If you are seriously price challenged, then perhaps it’s time to shift to a business where you can be rewarded for the value you provide.
There are excellent strategies that help soften the introduction of a higher prices to your existing clients. You’ll want to choose one that makes sense for you and your business. Make sure that you transition the majority of your clients to the new price point, WITH the understanding of the change in value.
Remember, reviewing your price is one of the simplest ways of significantly changing your revenue. Make sure you stay close to it!
Image credit: Dave Fayram
Abbie Widin
Abbie is the principal of One Extra Zero, and specialises in helping ambitious women service providers significantly grow their business by selling better. Abbie finds that these women are so busy that they start to drop some balls, but still put a lot of pressure on themselves to succeed. She helps them clarify their goals and growth strategies, how they market themselves and how they sell themselves, and how they can leverage themselves that they can focus on growing the business. She loves seeing her clients rewarded with rapid growth. Abbie has a marketing and management background in building 9-figure businesses with 8-figure marketing budgets, and brings an energetic feistiness to coaching her clients. She is working on her book about Mindsets of Million Dollar Businesswomen (released April 2014).