Are you Charging What You're Worth?
Pricing Part 4
Did you miss Part 1, 2 and 3?
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There is going to come a time in your service based business when you will need to raise your rates. And there are a couple of reasons for this:
- You started off charging waaaay too little as a new business
- You're not meeting your current income goals
- Your skills have increased with experience
- Your value to other business owners, clients or customers has increased as you successfully support more and more people
- You want to attract a higher calibre of client
Whatever the reason, you need a plan in place for when you raise your rates.
Here's how to get started:
Take a look at your current clients
Will you raise their rates as well?
If the answer is no, then you have to consider if keeping them will be worth your time, or if you’ll feel resentful at the amount of (lower paid) time you are spending with them.
Resentment can build up, so be wary of this. It’s better to raise their rates than providing poor services due to hidden anger.
If the answer is yes, then you have to prepare yourself for potential fallout. Simply put, there are some clients (you likely know who they are) who won't be happy about a price hike. They’ll threaten to leave. They may actually leave. Make sure you're prepared for the hit should that happen.
Decide when the rate increase will start
This might be different for each client, depending on when/how they’re paying you. A client who has paid upfront for a package or service may not see the price increase until they purchase another package or service from you.
If you can, give you clients at least 30 days notice of the increase, so they can decide to budget for the higher cost or choose to go elsewhere.
Take a look at your current products
In my business, when I talk about products, I'm referring to digital learning products. These tend to be re-launched at multiple times of the year. Next time you decide to launch, review the current price and make a decision about how much you plan to charge this time around.
In my case, the first launch of any of my programmes includes a significant action takers discount. The reason for this is that the programme is new, and although the content is all ready and available to use upon purchase, I do tend to add further content as myself. and my learners work through the content together as it allows me to address any specific needs as we go. The result is that the programme is bigger and has more value when it comes to being re-launched.
Create a last chance special offer
Before you change your pricing, you might want to consider having a last chance special offer at your current rate/price. Announce that your rates are going up on [whatever date], then offer to let X number of new clients lock in your current rate, or X number of programme purchases on a first come first served basis.
Having a few new clients will improve your cash flow and help those standing on the sidelines to take the leap to work with you. If working at the old rate is a worry for you, then offer this rate for a limited time, after which you client could choose to stay on at the new rate or go elsewhere.
Important point to note
The most important thing to remember about rate increases is this: You have to feel good about the prices you charge. If you think your rates are too low, chances are good that they are. Raising them will not only make you feel better, but it might just let your current and prospective clients know the value of your services as well.