Pricing for wimps: Raising prices
How can you increase your prices without treading on your regular customers’ toes?
Last September my hairdresser and I had our seven-year anniversary. While we were reminiscing on our 84 afternoons together it dawned on me that he had never – never! – put his prices up.
I contemplated not mentioning this fact. After all, I am the beneficiary of his oversight. But honesty got the better of me, so I asked him about his pricing.
“Oh I never put my prices up for existing clients.”
"Clients will rarely leave due to a price rise. Most stay because they love your service. "
“New ones, yes, but existing ones no, never.”
“Um, why not?”
“Because how can I tell my customer that the service that cost them $150 last month is going to cost them $175 this month?”
I understood what he meant and, knowingly shooting myself in the foot, I gave him a pain-free ‘raise the prices’ plan to follow. It worked for him and it might for you, too. Here are my top tips:
Set a date a couple of months away to be your ‘price rise date’. Pop it in your diary and promise yourself to commit to it.
Work out your new pricing: Of course, this is quite complex. The important thing to decide here is whether you are going to commit to doing regular price rises (in which case this rise might be quite small) or whether you are going to go for the rare and large option.
Make it annual: I’m a huge advocate of the annual price rise. Longer than that and you get out of the swing of it. Any shorter – say, every six months – and it feels too often (but go ahead if it works for you). The lovely thing about the annual price rise is that after the first one you can say to your customers as part of your routine, “Our annual price increase will take effect on 1 January,” making it painless.
Back to the tricky problem of the first price rise…
There are two places we get stuck:
i. We worry that our clients will leave
ii. We don’t know how to actually say it.
Leave your worries behind: Clients will rarely leave due to a price rise. Most stay because they love your service. Some will stay because it’s a case of ‘better the devil you know’, and a few might even say, “About bloody time”. A couple of clients might leave but these will be the ones that were looking for an excuse to go. They’re likely to be high-maintenance clients anyway. You can replace them with better ones.
How to say it: If you’re really struggling with this, blame someone else! You can say something like: “I was talking to my business coach/mentor/friend/Dad/investor and he noticed that my pricing was a bit ropey so we’ve looked into it and I’ve been undercharging for year! I hope you don’t mind but I’m putting my prices up on 1 March to bring them into line.”
Some of you might not like the “I hope you don’t mind” part of the sentence above, and please don’t use it if you don’t need to. The important thing is that you sound like YOU, not some mysterious third party (e.g. “Please be informed that with immediate effect the price of $X is now…”). Clients buy you and if you find the whole price raising thing a bit tricky you’re probably the type who feels more comfortable including something along the lines of “I hope you don’t mind”. It’s not a sign of weakness; it’s a sign of being a real person.
Practise your price-rise speech at home a few times before you do it for real.
Do it! When your chosen date comes around, start telling people.
Once you start talking about your price rise – and realise that you will still have clients – you’ll get more confident and, before you know it, you’ll be done.
Have you raised your prices before? How did you ensure the process ran smoothly, and did you retain clients?
Read the full ‘Pricing for wimps’ series:
- Getting started
- Your minimum hourly rate
- How to get the price you want
- Should I charge the same as my competitors?
- The four-letter words that backfire
- Should I give a quantity discount?
- Do I have to charge everyone the same?
- Your customers’ biggest fear
- How to price for speed
- Be the boss of your price