Raising your prices is both exciting and intimidating. On one hand, it means you can make more money and possibly work less. On the other hand, there’s a chance your current clients won’t take the adjustment well. So how do you strategically raise your prices while appealing to your current clients?
Follow the steps below to raise your prices, and use the included email template to communicate the change with your current clients. And if you’re not sure what to charge, check out this blog post on how to figure out your pricing!
Why Should You Raise Your Prices?
When you first started your business, you probably decided on prices that were low enough to reflect your expertise and wouldn’t scare away potential clients. While that pricing model is tempting as a fresh business owner, it’s just not sustainable.
According to the Small Business Administration, over 20% of small businesses fail. A successful business looks different to every entrepreneur. But at the end of the day, the goal is simple: make money. If your prices aren’t high enough to keep you making money, your business won’t survive.
Plus, raising your prices establishes you as an expert in your field. Higher prices might ‘scare away’ lower-paying customers, but they naturally attract higher-paying customers. They make your services appear more valuable, and in doing so, they attract a higher-level clientele.
When Should You Raise Your Prices?
There’s no tried-and-true timeline for raising your prices. There are, however, several questions you should ask yourself if you’re thinking about it:
Do my prices reflect the quality of my product or service?
First and foremost, your prices need to accurately reflect how amazing your product or service is. There’s a reason a Patagonia jacket is more expensive than an off-brand version you might find at Walmart. In addition to that flashy brand name, you know that the Patagonia product is made of higher-quality materials and that it will last longer. High quality product, higher price!
The same should be true for your prices. If you’re delivering a top-dollar service, you should charge top-dollar. Your prices should reflect the quality of your product, service, and client experience.
Do my prices reflect the time and energy that goes into your work?
I see it time and time again: small business owners charging so little for their products and services that they’re essentially paying themselves minimum wage. Not only is that unfair to you, but it does the entire industry a disservice! When we underprice our services, we set a precedent for cheap work and make it harder for others to charge their worth.
If you’ve spent years learning about your industry and improving your services, your prices should reflect that as well. All of those hours spent educating yourself and honing your craft add value to your work.
Do my prices allow me to live the life I desire?
Your prices should allow you to pay yourself well. Determine how much you want to make, how much you want to work, and how much you’d have to charge to meet those goals. Then, make it happen!
If your business can’t get you closer to your dreams, it’s time to rethink things. Let your vision for your future give you the confidence to finally raise your prices.
4 Steps to Strategically Raising Your Prices
Now that you know it’s time to raise your prices, here’s how to do it strategically.
Step 1: Do your research.
While I never want you to spend too much time focusing on the competition, it is valuable to know what others in your industry are charging for comparable products and services. Do some research to determine a general range of prices. Chances are, you’ll end up with a wide range that you can then use to hone in on your own ideal prices.
Step 2: Determine your new pricing structure.
Next, sit down with a calculator and create your new pricing structure. For exact steps on how to figure out your prices, check out this blog post.
Step 3: Create your game plan.
Once you’ve determined your prices, it’s time to create a plan for implementing them.
If you plan to raise prices for existing clients, determine a date by which you want all of them switched over to the new structure. Then, create a plan to slowly transition them to the new prices.
For instance, you might decide you want to raise your clients to a price of $60/hour from your original $50/hour. In that case, you could raise the rate by $2.50/hour for four months or by $5/hour for two months. This gradual increase in price is easier for some people to adjust to than a sudden jump.
If you’re only raising your prices for new clients, all you’ll need to do is change your prices on your website, contract, and anywhere else they appear as set dollar amounts. Easy peasy!
Step 4: Communicate with your current clients.
The most intimidating part of raising your prices is having the tough conversation with existing clients. While you should prepare to have a couple clients drop off your list, you’d be surprised how easy the conversation can be with the right preparation!
If you’re unsure how to communicate your new prices with your clients, try this email template:
Hi there, Jennifer!
I hope you’re having a great week. I’ve been hard at work organizing your receipts and creating an end-of-year financial report. I can’t wait to share it with you!
I wanted to let you know that my prices will be increasing from $50/hour to $60/hour as of January 1, 2022. I’ve already implemented several improvements to my services–like my upgraded reports, weekly Voxer check-ins, and additional metrics for tracking–and I want my pricing structure to reflect that.
Because I’ve loved working with you these past two years, I want to make the transition as easy as possible. If you decide to stay on (which I really hope you do!), here’s how the price increase will take place:
In January, our hourly rate will increase to $52.50/hour.
In February, our hourly rate will increase to $55/hour.
In March, our hourly rate will increase to $57.50/hour.
In April, our hourly rate will increase to $60/hour.
If you have any questions about the new pricing, the improvements I’ve made in my business, or the above timeline, I’d love to chat via Zoom. Just let me know!
And in the meantime, have an amazing week!
Swap the underlined information with your own, and send the email one billing cycle before your price changes go into effect. Then, just be open and honest with your clients as they adjust.
Step 5: Raise those prices!
Once you communicate the upcoming price increase, it’s time to make it happen! Be sure to update upcoming invoices, your website, your contracts, and anywhere else your pricing appears. If you work with a bookkeeper or accountant, keep them in the loop as well.
Step 6: Check in with your numbers.
Once you’ve successfully raised your prices, be sure to check in with the results every once in a while. Pay attention to how much you’re working and how much you’re making. The next time you feel you should raise your prices, you’ll have a game plan to help you make it happen!
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