Inevitably the biggest challenge you will ever get for raising your prices will not be from your clients, but will come from you. You will fear losing your clients, even if the price increase you are considering brings you up to prices that are comparable to your competitors.
That fear is normal. But the reality is you will rarely lose clients when you increase your prices. After all if you lose a client over prices, they are price shoppers… and is that really they client that you want.
Sometimes that fear is insurmountable without some strategy, keeping entrepreneurs stuck in a bad pricing model. If that is your situation, use the “More For Me” pricing increase strategy:
1. Tell your best client that you company is growing and bringing on new people (contractors, employees, part time, full time, it really doesn’t matter… you just need to explain that you are growing).
2. Tell them that you and/or your key employees will be continuing to do really the high end stuff, and that you need to charge a premium for that time.
3. Tell them that some clients like working with you (and/or your best employees) so much that they have requested to continue working with you exclusively and understand that as a result can’t do other high-end stuff for clients.
4. Then say to make it fair for you (and all your clients), that you are charging your premium rate for all work.
5. Tell the prospect that your other clients have no problem with this and you wanted to make it available to them if they are interested.
Don’t say another word and see what they say.
If they won’t proceed with the higher price and will seek the services of another firm, you can explain that is exactly what you are making available through your new people. Conversely if they say they are ok with the higher price to continue working with you and/or your best employees you have achieved what you want.
Either way you keep the client and aren’t at much risk of losing them during your price increase.
And if people are STILL afraid to do this then there is an even simpler way.
Just raise the rates on the next new client that comes in the door. Eventually what will happen is you’ll have all these new clients at the higher rates.
Then you can go back to the old clients, let them know that in order to keep up and keep providing the same high level of service you need to raise your rates. If they go away, no big deal because you have all these new clients already paying your higher rate!
EXCELLENT POINT. That is a simple easy way to step into it.
Warning: If you are desperate you won’t even raise prices for the next guy. That is dangerous. So if you never raise prices, even for a new client, know that you are likely desperate and need to change your mindset ASAP, or you will never see results.
Hi!
This is great for services, but I am struggling to find the gumption to raise the price on my higher-end-for-my-niche product.
I need to raise the rrp 28% from my current price to be profitable.
My products are made in Aus and top quality, small batch etc which people love…but I’ve stupidly been charging the same price as the Made in China/Mexico competitors.
Explain why and rip off the band aid or increase incrementally? Or explain there will be an increase at start of next financial year, giving a last chance to order at current prices?….. TIA!
First you most convince yourself… and hopefully you already did, since you call the price “stupid.”
Next with your existing customers, I suggest a few increments to stave off losing them.
New customers move to the new price immediately, since you haven’t done business with them it sets the expectation from day one.