Three Questions That Will Help You Raise Your Prices
Chances are, there is a gap between what you are currently charging and what you wish you were charging for your services. But thinking about making any sort of change to your current prices gives you cold sweats. You begin to play out a story in your head where all of your current clients leave you and no one is willing to pay what you now charge is terrifying enough for you to continue to charge what you've always charged and stay where you've always been. Let's change that. I want to give you a few questions to ask yourself that might help you justify a price increase, and the confidence to explain to others why that price is fair. Here are three questions that will help you raise your prices.
1) What can I do to increase the quality of my current offering?
A McDonald's cheeseburger costs 45 cents to make. They sell them for one dollar.
A burger at a steakhouse costs around 8 dollars to make, and can be sold anywhere from $18-25.
McDonald's is making 65 cents while the steakhouse is making $10+. Why?
The steakhouse made the $7.45 investment to create a product that was worth 20 times what would be on the dollar menu.
What are the steps you can take to increase the quality of the service or product you offer? Maybe it's gaining more training or investing in your expertise. Maybe it's investing in new software or tools. It could be becoming more laser-focused on one aspect of what you do to become an absolute expert instead of a generalist.
Another question in the same theme is, "What have I done to grow since I last changed my rates?"
If two years ago, you priced yourself at what a coach with three years of experience would charge, you need to reevaluate what a coach with five years of experience should charge. You're offering a different product than you were two years ago!
2) What features can I add to increase the value of my offering?
It can be a hard sell when you have a conversation with a client about your new rates when your justification is only that you're more experienced or that you need to make more money. If you're feeling insecure about taking question one to the bank, try brainstorming this one: what features can I add to increase the value of what I do?
If you're a photographer, instead of just showing up and shooting, you might add a photoshoot planning call, build mood boards, or do the location scouting.
Then, if your new prices are met with opposition, you can then point to how it's an upgraded service/product and that's why the price has increased.
When you choose this approach, it's important that you do your math. The time it takes to add these features needs to be less than the time it would take to perform the service all over again.
To use this photographer example: the time it takes you to create the mood board or do the location scouting needs to be making you more than if you just spent the same amount of time taking another photoshoot. Otherwise, you raised your rate, but aren't making any more money.
3) What can I do to become more efficient to take on more work?
So if McDonald's is only making 65 cents per cheeseburger, how the heck are they still in business? They have an extremely efficient system. To beat out the steakhouse burger margins, McDonald's is betting that they can sell 16 cheeseburgers in the time it takes for J. Alexander's to sell one.
I'm not calling your service a McDonald's cheeseburger. But one way to make more money is by streamlining your process to be able to take on more work.
Is there something in your process you can automate? Is it time to include a virtual assistant to take some of the menial task work off your plate that's slowing you down? Is it possible to help two clients at the same time if they're facing similar problems?
This very much depends on your industry, but just brainstorm how you could make more time to take on more clients. Maybe instead of a one-hour onboarding phone call, they fill out an online form and you take 15 minutes with them to go over their submissions.
For this, it could be helpful to take an inventory of what you're spending your time on and evaluate if you're operating in your superpower or outside of it.
If your hour is worth $50, and it takes you 3 hours to manage your budget but it would take a virtual assistant on hour (also at $50/hour), that would mean that by paying the virtual assistant 50 bucks, you just freed yourself up to earn 100 more.
How can you streamline your process to be able to take on more work?
Final thoughts
You got into business to serve people not to gouge them. But if you're not charging what you're worth, then you might not be in business for very long.
Pricing your services and products doesn't have to feel icky or greedy. By asking yourself these three questions, you can help get clear on why your prices are where they are and if there's room for growth.
What are some other questions you ask yourself when determining your prices? Let me know in the comments! And if you're still feeling stuck, reach out, and let's chat about how I can help.
