Increasing your prices is a fantastic way to make more money for the same amount of work. And (added bonus) there are a few surprising things that can happen as your prices increase.
In this episode I discuss these, and share how to increase your prices confidently.
Something that I help my clients with a lot, is how to go through the process of increasing prices. In today’s episode, I am going to share why you should increase your prices, how much you should charge if you put your prices up, and three surprising things that happen when you go through the process of a price increase.
You’re listening to the Clare Wood podcast, where we talk all things business, finance, marketing, and mindset for entrepreneurs, sharing practical tips, and actionable advice to help you take your business to the next level. Introducing your host: me! I’m Clare Wood, I’m a numbers geek, a travel lover, and a reality tv addict, and I’m here to empower you to create an extraordinary business and an amazing life, because I believe you don’t have to choose between the two. Now let’s dive right in to today’s episode.
Why would you put your prices up? Increasing your prices is a fantastic strategy to grow, especially if you offer a non-scalable service, such as copy-writing, design or even coaching. Raising your prices is much more effective then reducing your service delivery, because if you have a service-based business, you are going to reach capacity when you are trading your time for money, this comes to a certain point where you cannot deliver the same level of service if you are maxed out with your capacity.
I’m not saying increasing your prices is the right strategy for everyone, because there are certain markets and sectors that it’s not going to be appropriate in, however it is a highly effective strategy to make more profit and sales inside your business, without having to work harder.
How to work out how much to charge
If you are looking to increase your prices, you might be wondering, how much can I charge? There is a simple equation from economics, called Supply Vs Demand. The more expensive you are, the less people can afford your services. No matter what you do, there is always a high end of the market, so the question needs to be, where do you fit, what kind of clients do you want to service, because that will play into what you want to charge.
Tackling your mindset around raising your prices
If you say you are going to go for it, you are ready to increase your prices, what you mind find is you may have some resistance that goes on inside your head. You might think, nobody will pay that much, or people won’t like me, my clients will think I’m greedy. All these feelings are totally normal. The first thing to do is identify what these feelings are and recognise you are feeling them, then reframe them. How else could you look at that exact situation? When you increase your prices, your market might change, and that’s ok if it’s right for you.
3 surprising things that happen when you increase your prices
This is something I have notice when I have increased my prices, as well as something I have observed when my clients have done the same.
The first thing is that sometimes, the calibre of your clients increases. I’d like to be super clear here, since the start of my busines, I have had amazing clients, it’s been a rare occurrence, however as mu prices have gone up, what I found is that the clients that pay more accept more responsibility for their own results. They don’t hold me accountable for their successes, they recognise they are in the drivers seat.
Another thing I’ve heard and seen a lot, is the more people pay, the less they micro manage. They have chosen an expert, so they lean in and trust you are an expert, and they don’t question what you are doing. Because they don’t question, they take your advice onboard, so they get better results. I have had two of my clients at the moment say to me “I just do what you tell me to do” so it’s not surprising that they are getting amazing results, because they are trusting expert advice and going with it.
I want to give you another example in this space. When I have my first re-brand done I micro-managed the whole process. I literally said, this is what I want it to look like, these are my colours, I was super clear about what I wanted and every step of the way I was questioning the decisions that were made. Now generally, I will find someone amazing, I’ll pay them well, and I will trust that they deliver. It doesn’t always work out but I swear the more I pay my team of contractors the better results I get. I have a much higher strike rate of success.
The second thing I’ve noticed with increasing prices, is that negotiations on price disappear and sales become easier. Isn’t that interesting. At the start of my business I had to justify my prices, but as time has gone on and I have been able to demonstrate I am a leader in my industry, and I get incredible results from my clients, the conversation around price virtual disappear and sales become easier. This is something I have noticed with clients of mine as well, they are blown away by how their conversion rate improves as their prices go up. Here’s the thing, people aren’t paying you a price, people are saying for a solution to their problem. If you deliver and they know you can deliver, your clients will happily pay you, no matter what you are charging. So it’ important in your marketing to focus on the results you deliver and not on the cost of your services.
The third surprising thing that has happened is that you are much more respected by peers and potential clients. Often the price point that you charge, establishes you in the market and people form a perception of the quality of work you deliver. So increasing your price point establishes you as a quality leader in your industry. The right customers, the ones that can afford your services/product, will buy from you.
We need to remove emotion from pricing, people will either pay it or they won’t. You are in business and if you choose to raise your pries, you don’t need to seek permission or explain why, you don’t need to justify and you don’t need to explain how you will spend the additional income. This all comes back to mindset. If you are confident about the price increases, you won’t feel the need to justify a price increase.
On the topic of mindset, something I notice that comes up for women a lot, is a fear about not being able to help people. I understand that. A lot of us in the service space are empaths and want to help people, but as much as we want to help everyone, we can’t. All you need to do is focus on your people and your dream clients, and recognise that the more money you earn, the more potential you have to serve your community in others ways, for example through charity donations or giving your time. The more you earn, the more you have the freedom to choose how you spend your time and money.
What is the process for increasing your prices
So how exactly do you increase your prices? Let’s be clear here, it’s not a matter of sticking new prices on things and hoping it sticks. Don’t just jack up your prices, do it in a strategic way. Yes, sometimes this process happens quickly, but sometimes it’s measured and done incrementally over time. Something to consider when increasing your prices, there is a possibility that you will reduce your client numbers, the supply v demand factor, and you need to be aware there may be backlash. If you think this might be coming, hopefully that helps you navigate through this prices better. It’s really important when you make this decision that you don’t go into a fear spiral if a small number of people say to you, you are too expensive. Stick to your guns, know that you have done your market research and you are confident in your price.
If you are loving the sound of everything we have spoken about today, and you would like me to help you increase your prices, please check out my services, I can help in a 1:1 capacity or group offering. I am super passionate about women business owners making more money inside their business, and I’d love to support you to increase your sales and profit inside your business.
Thank you so much for joining me today, if you enjoyed this episode, please make sure you subscribe to receive future episodes, and I’d be so grateful for a review on apple podcast! If you’d like a copy of the show notes or any of the links mentioned today, please jump over to clarewood.com.au/podcast and remember that Clare is spelled CLARE, have a wonderful week and look forward to chatting to you again soon!