No matter where you’re at in business, you should be thinking about that next level. Growth doesn’t necessarily mean hiring people to work for you or offering new services. It can just as well be a strategic plan for building your expertise in a particular area and continuously building your own niche in a particular market. Either way, though, your growth plan should include increasing revenue.
Our discussion here about raising prices works for service and product businesses, so hang tight even if I say “rates” or seem to focus more on service-based businesses. Your business may even be a blend of these two models… all of this works for you too!
So, how to grow revenue? Well, one way is to raise your prices.
Real quickly though… a sidenote: You might realize that you’re charging way less than other folks your ideal customer would be attracted to and you’re okay with that. If you want to stay on the low end of the market, though, you must to do two things very well. First, you have to work really hard to show your expertise and build trust with your potential customers because many people think the lowest price means not as good. Second, you have to focus on doing a high volume of work (or selling a high volume of things) if you’re going to price at the lower end of your market.
I know of an artist whose business model works like this and he does really well. But you better believe he’s booking a lot of shows and festivals and is in the studio churning out paintings like there’s tomorrow! Contrast that to a fine artist who charges hundreds (or even thousands) for one piece. He’s likely painting a lot less… and his marketing strategies are going to be really different from the low price, high volume model.
Now, for those who do want to raise your prices, or at least have a plan for doing so in the near future – my three favorite feel-good ways to raise your rates:
Committing to an incremental increase.
With the incremental increase method, you simply raise your rate with each new client. As soon as you start getting pushback from a few of your leads regarding the investment of working with you, you’ve likely found your ideal price for awhile. Once you stop getting some “no’s” it’s time to repeat this process.
Creating tiered offerings.
Another way to raise your prices is to repackage your offerings into three groups, or tiers. Your first tier is the minimum your ideal customer needs to purchase in order to reach their goals. The second tier is the sweet spot where they get everything they need plus a few extras that propel them even further. The third tier is a premium offer that gives them everything they could possibly want or need
to reach their goals and more. If you’re a product-based business, you will simply bundle different items together in this same manner.
By offering your products or services like this, you’re likely to find new ways to add value to your offerings. Extra value justifies higher rates. In addition, you’re giving customers choices in how they invest in your products or services.
Going cold turkey.
With the cold turkey method, you just raise your prices and roll with it. First, craft a confident email to all your clients letting them know that prices or rates will be going up. Keep it positive by detailing how you support their business currently and explain the additional value you’ll be providing at the higher rates. Give them all plenty of notice so that they can budget for your new prices. If possible, create a new way they can keep working with you at their current pricing but with fewer deliverables or time involved.
If you’ve been reading my emails and this blog the last few weeks you’ve probably been doing a lot of thinking about pricing. If you’re ready to really run some numbers, check out Potential to Profit guidebook and Excel sheet now for sale in the Shop area of my website I made this workbook to help you escape the trap of working too hard for not enough money. Plus the Potential for Profit Excel spreadsheet has all the formulas you need to price everything from products to services and even online courses! Using the spreadsheet, you’ll be able run different pricing scenarios to see what will fit you best… it’s pretty robust!