Raising prices. It’s a hard thing to say to someone, isn’t it? Although I’ll admit it’s a much nicer thing to say than, “I’ve decided I’d like to make more money while doing the same amount of work.” Still, it’s very difficult to know when you can ‘get away’ with raising your prices. Most of the small business owners I’ve spoken with are enormously reluctant to raise prices ever, because they’re afraid it will scare away all of their clients. (And not just them – Netflix and Amazon also spent months debating price hikes before actually going through with them.) The fear of losing business is a very justifiable fear, but if you never raise your prices then you’ll be making the same money in 2018 that you made in 1980, and that doesn’t work either.
So, here are a few indicators that it’s finally time for you to take advantage of the time-honored tradition of making more money by doing the exact same thing you were doing yesterday:
Whenever Anyone Tells You That Your Prices Are Reasonable
Let’s say you’re a graphic designer, you quote $500 for a job, and the client responds by saying, “That sounds very reasonable. Let’s do it.” What they really said was, “Wow! I thought it was going to be more expensive than that. Sweet! I’m going to sign this before anyone realizes I would have paid more for this.” So if you start hearing how reasonable your fees are, you might want to kick them up a bit to make them less reasonable. There’s a big gap between ‘reasonable’ and ‘outrageous,’ and you deserve to be playing somewhere in between the two.
When You Don’t Want To Do A Particular Type Of Work Anymore
OK, so this time you’re a general contractor. You like remodeling, you’d be happy re-wiring a building all day long, but you hate roofing. (Note: I picked that one because I re-roofed a house once, and that was enough for me to hate roofing.) If you’d like to steer your business towards more remodeling and less roofing, then raise your fees for any roofing bids you send out. Yes, you’ll do a little less work, but in this case that’s the point. Just make sure that you raise your fees sufficiently so that when people do accept your new rate, you’re making enough money that you won’t mind doing the work.
When You Start Getting Referrals
Yes it is true that everyone can shop for everything on the Internet, and yes that often means you have to compete on price. But even now, with all the technological tools at our disposal, nothing comes anywhere close to beating a referral from someone we know, especially if it’s for some kind of service. So if your current customers are recommending you to their family and friends, you need to take that for what it is – an acknowledgement that you do good work. So if you kick your fees up by $50 or $100 (or $500 or $1,000 or whatever), the person who’s been referred to you will then have to ask, “Is it worth the savings to find someone cheaper but whose work hasn’t been vetted for me?” A lot of times, the answer is no, and congratulations! You’re making more money.
I hope this helps. If you don’t like these suggestions, then you could always charge $10,000,000 for whatever it is that you do and just wait for one person to say yes. After all, you’d only need one sale and you’d be set for life. But I think these others ideas are a little easier to execute.