Raising your prices is the easiest way to get more cash into your business – I think we can all agree on that.  But when I speak to most small business owners, they baulk at the idea.  ‘But do you know how many customers I will lose??’ is usually the phrase I get back…  The answer is, no.  But its not as many as you think.  What is not acceptable in my eyes is winging it and hoping for the best.  If you don’t have a strategy around pricing, how are you able to plan anything?  Your margins will be all over the place and you won’t have consistency in cash flow.  Once I coached a client through this, their own clients actually thanked them for rising prices.  It’s all about perception and value.

The first step is to understand where you are.  If you are an average of the businesses, I speak to on a regular basis – you probably haven’t raised your prices in a while.  In that time, everybody else has raised theirs, inflation in rocketing, and there is a perception there is less money going around.  All of this means if you don’t raise prices, you are going to be in the red pretty soon.  The analysis may prove that you don’t need to, but if it makes for bleak reading you might have to do the inevitable.

People expect price rises.  As long as you are providing value, people will be happy to pay the extra.  Its more how you do it that matters to people.  The key is to communicate effectively and be open and honest.  Explain how your supplier costs are increasing and most importantly thank them for their loyalty.  I coached someone through this a few weeks ago, and a couple of his clients actually thanked him for rising his prices!  Imagine that!

So, here’s a game plan for how to do it.

  1. Adopt the right mindset. If you keep telling yourself clients will leave because of your price increase, they will.  Be proud of how much you charge.  Communicate the value you provide in a number of ways: Social Media, phone people, have 1:1’s, email your client list.  But most importantly detach yourself from emotion.
  2. Do your research. Make sure you know your margins and identify what others are doing.  Why are your competitors charging that much and what’s the gap between their product/service and yours?  Be realistic, but don’t limit yourself.
  3. Imagine you are at an auction, and the auctioneer is selling your product. Start at what you currently charge an imagine going up in pre-determined increments.  How do you feel with each increase?  Once you start to feel uncomfortable you know you have probably hit your limit.
  4. Give fair warning. In other words, communicate effectively to your client base.  Tell them when, how and why prices are increasing.  Open up a dialogue.  I cannot stress how important it is to get this mini PR campaign right.  Be really transparent on this.  Deep down, people realise prices don’t stay the same forever.
  5. Cushion the blow. Can you provide additional services along with a price increase?  Can you stagger payments?  Can you offer special terms for early or bulk payment?  All of these will help your clients so its worth exploring, it might just be the difference between keeping a client or losing one.

Finally, it may be that you do lose some clients.  That’s ok.  You’ll be making more profit so its affordable, plus they are probably what I call ‘D’ grade clients anyway.  They would have moaned whatever your prices were.  Now you have space to get some ‘A’ grade clients.  The aim here is survival and the results could be worse if you don’t raise your prices.

I’d love to know if you have raised your prices recently, what went right and what went wrong?  Drop me a message if you would like to know more about raising your prices.