As 2011 comes to an end, business owners everywhere start thinking the same thought… “Should I raise my prices for 2012?”
It can be an agonizing question. You want to be paid an amount that feels good and supports you well, but you also don’t want to alienate people or shut down your business.
And it’s not an idle question. You can raise your prices too much and see “die off” from your active customer list. By the same token, you can continue to underprice yourself, and that keeps people away, too, and may keep the wolf at your door.
What to do? What to do?
A Few Words About Pricing
One of our most popular and most-referred to articles is on pricing. So, let me add a few more eye-opening thoughts that should make this whole process much easier.
First, raising your prices is inevitable. Maybe not every year, maybe not even every other year. Are you paying the same price for shoes that you did in 1984? Prices go up.
I’m also guessing that you may not be taking into account the true price of your offers. One client realized she was only accounting for her time in front of a client, and not on the administrative time required, the marketing time required, and prep time before and after the client, the continuing education of her own self-development, etc. For every client hour there were 1-3 additional hours needed to really care for that client.
Okay, I think you’re getting it. You probably know whether your prices really need to inch up a bit or not.
And If It’s A New Offer?
A client was about to launch a new offer, and we were talking about it the other day. She was struggling with how to price it because it was radically different than any other offer in her business.
I told her to 1) make it easy for new people to buy and 2) make it significant enough of a price so that it felt good and she could keep offering it.
Comfort and stretch.
If it’s a new offer you’ve never made before, find the price you’re comfortable offering and stretch just a little bit. My experience has been that the price you are completely comfortable with in theory will probably feel too low once you actually start engaging with paying clients.
So stretch a little bit to avoid needing to raise your prices two weeks later.
A Little Pricing Trick
There are pricing ranges, where one price feels very similar to another. For instance, whether I spend $16 or $19 on something won’t really affect my purchasing decision, but the extra $3 multiplied by 10,000 sales may help out the business tremendously.
Similarly, a massage that is price at $80 or $95 is a very similar price to the buyer, but to the massage therapist, that $15 per client, times 30 sessions in a month, times 12 months means an extra $5400/year.
You can jump from one price range to another, for instance from a $65 massage to a $110 massage, but that would require a step up in your marketing and how you describe your service.
As you sense into your next price, see how far you can go in your own heart while staying within the “price range.” It’s all a little subjective, so don’t worry about hard-and-fast lines, they don’t exist. Just feel into it.
Time to Tell The World
Of course, telling your clients about it is a different story. But, they may already know.
And you? Is it time to raise your prices or are you happy with them?
17 Responses
Hi Mark,
I raise my prices at least once a year and feel good about it. My logos designs are gorgeous, the result of my Fearless Why Branding and Dream State process. Folks who work with me get way more than a logo, they get back in touch with their alive selves. Because I feel good about the life gift my services provide, I don’t feel “icky” about my pricing.
Great post! G.
Raising prices will make the quantity of consumers less.
Economical rules say .. hire the price lesser the buyers and lower the price higher the buyers.
About your raising prices article, why is there no mention about how low inflation has been, nor a word about the fact that we have been in a serious recession for lo these many years?
This past year I’ve lowered the prices on my two main items (automatic gas shut-off valves and in-home earthquake preparedness consultations) and seen the amount of my business jump up significantly.
Peace,
Ibrahim
Larry Guillot
950 White Cottage Road
Angwin, CA 94508
Hey! This is my first comment here so I just wanted to give a quick shout out and tell you I genuinely enjoy reading your articles. Can you suggest any other blogs/websites/forums that deal with the same subjects? Thanks!
Those are great tips. One thing we should also consider when raising prices is our customers. Can they afford it or can they adjust to the new price coz one wrong move and our customers will be gone.
Nice contribution. Thanks. Keep up the good work here.
I like that you explained pricing ranges; how raising the price by a few dollars helps out tremendously in the long run, but doesn’t really affect the client or customer enough to beat them out of your price range. Thanks for the insight!
Thank you for this great tips. Have a nice day
Thanks for the sharing, keep up good work. I like that you explained pricing ranges; how raising the price by a few dollars helps out tremendously in the long run,
I was considering they have very bad moment considering Search engines lately released Search engines Hangouts but once I study people could cost a fee to perspective it; that is another tale. 🙂 Provided that Search engines does not add that function, Kondoot might have something going.
very interesting
as long as you have demand/sales/and at least a little increase, it would be safe
probably not for starting out as a small buisness or drop in traffic
all about carefull planning
thanks heaps 🙂
james
Hi,
My philosophy in business for pricing is put the price that will satisfy you and your business. Raising price too much can make less customer come to buy our product. Economy rules, when one thing is up, one thing will down.
Mark so great to find your special work again. We were both part of a coaching program years ago.
Love your message about incremental raises- ‘baby steps’ work. For those who worry that unless they discount the will lose customers I’ll share watch I teach.
When you discount your prices clients discount YOU. Disloyal & often demanding, the money received from them never makes up for the emotional toll they take.
Instead be generous, add meaningful value and clients will happily pay more.
Dina! Nice to see you here. And thank you!
Those are sound advice. One element we should also consider when increasing costs is our clients. Can they manage it or can they change to the new cost coz one incorrect switch and our clients will be gone
My viewpoint in enterprise for costs is put the cost that will please you and your enterprise. Increasing cost too much can make less client come to buy our products. Economic climate guidelines, when one element is up, one element will down.
I read in a book (drat but I can’t remember which, it might have been “Predictably Irrational” but I am not certain) that people are more like to purchase at a price point of $95 or $99 than $80. There is something bizarrely psychological about how an odd price will turn our brains off. It’s a bit like pricing something at $9.99 (why couldn’t they just call it $10??). So let that be a lesson to everyone who prices at $80 or $90. You’d make more money and your prices would be more psychologically appealing if you charged $99!
One final point: if you want to raise prices without freaking everyone out, do it just for new clients and basically “grandfather in” your old clients, at least for some interim amount of time, so you can increase their prices in smaller increments.