The Great Recession has been hard for everyone.
Business leaders have made the difficult choice between cutbacks in spending across the board and painful layoffs; many were forced to do both. But this, coupled with increased product and service pricing, is what has the kept doors open and profits flowing for these businesses--many of which will emerge even stronger after the recession has ended.
Yet solopreneurs and small-business owners are often the last to follow in the footsteps of these successful larger companies. When was the last time you raised your prices?
If your answer is never, years ago, or I can't remember, here's a tougher question: why?
Your reason for holding back on a rate or product increase may sound rational to you, but is it entirely? Are you struggling in business needlessly, when this one step could take the edge off?
Scary, isn't it?
During his inaugural speech, Franklin D. Roosevelt declared: "the only thing we have to fear is fear itself." Although you may believe that you will lose clients and scare prospects away if you increase your prices, I invite you to open your mind to the possibility that these are merely fear-based thoughts. FDR's quote is one of my favorites, because it serves as a reminder to never lose sight of our dreams out of fear.
Perhaps you truly believe you're not ready, but isn't it about time to find out if you're wrong? These simple steps will help you get clear on how to boost profits by raising prices.
1. Review your existing results.
What are the most significant results that your clients have achieved while working with you? Has your work aided in an increase in revenue, enabled them to take time off, generated new ideas, or put valuable systems and processes in place? Does your service help people to relax or feel better about themselves in some way? Has your product made their lives easier or more pleasurable?
Create a few notes on your clients' top results. This will help you to feel more confident about what your products or services are worth. This exercise also results in a list of benefits to pass along to your clients and to use in your marketing materials.
2. Forget about what everyone else is doing.
If you've confidently identified your unique value in business, it doesn't matter what your competition is doing. You are unique; there is a differentiating factor that adds value to your products and services. Don't compare apples to broccoli!
3. Think about your work in packages.
As a consultant or coach, it's simple to raise your rates when you combine the strategy with packages. This will attract clients who are willing to invest in themselves long term and reap the financial rewards associated with doing so. Add value to your packages with additional features; make it worth their time to buy a larger package. When you take away the need for clients to "re-up" every month, they are apt to stay with you longer and enjoy the benefits of ongoing support.
4. Offer greater value.
Case studies, white papers, and additional resources and support methods are a few of the valuable add ons available to service-based businesses. Beef up your weekly reports, offer monthly competitive reports, or schedule an hour every other week as an "open time" for clients to call in for free support. Your clients will readily accept a rate increase when you show them the value you have provided, coupled with add-on value.
5. Consider a joint venture.
For both product- and service-based businesses, joint venture partnerships are a powerful way to increase revenue and visibility. Find a compatible product line and approach the company about bundling your products. For services, partner with someone to offer services that complement yours to bring a whole new audience your way.
In the end, you just might lose a few clients or chase a few customers away when you deliver the news of an increase in pricing. But your increase will make up for that loss, and future customers aren't likely to flinch at your pricing. And you will certainly be more profitable.
Remember, you're worth it, and a good customer knows it!