How to justify a big price increase
Let me ask you a personal question - just how often do you increase your prices?
When was the last time you announced an increase?
If you’re anything like the average entrepreneur the answer is probably “never”, or “not for ages”.
In fact, most people I know are totally undercharging in the first place, and that’s a recipe for burn-out and can even affect your positioning in the marketplace.
Increasing your prices is something you need to do regularly as a business owner, and honestly doesn’t need to be scary – so let’s look at how you can justify it to yourself and to your clients without feeling bad or greedy.
Be honest with me - when you think about increasing your prices, do you feel guilty about it?
If you do, that’s actually really common.
The truth is that pricing is one of the things that feels really emotional for people like us. It can be really tough to set your own prices, which is why so many people try and crowdsource their pricing or want someone else to just tell them what to charge.
Think about it: if you’re in a job, the company sets the prices. But now YOU’RE the boss, so YOU have to look after it. Bummer, right? (but it doesn’t have to be.)
When I was first working as a junior in a consulting firm, I was charged out to clients at a certain rate per day. As I got more experienced and did more training, they increased my charge-out price. The company had no qualms or money blocks about increasing my rate.
But when I started working for myself, I charged lower than all the other coaches I knew, and felt like horrible every time I increased my prices – even just a little bit.
It’s really common to look around at what everyone else is charging and either average it out, or undercharge their competitors. And that’s a HUGE mistake (but don’t worry, I’ve got an excellent resource for you to get over that pricing block).
If you’re in the same boat and the thought of increasing your prices makes you feel sick, I’ve got three factors for you to consider to help you justify it.
Factor #1: Experience
Have you noticed that some hairdressing salons charge different rates depending if you see a junior or a senior stylist? If you’re after the absolute best result, you’ll go for the senior stylist, but it’s only fair that the apprentice doesn’t charge as much, right?
There’s a price point for every market and budget, and this is true of any kind of business too. Experience often means better results for your clients, and you can totally justify higher prices.
If you’ve got a lot of experience, you’re confident about the results you can get for your clients and you save them time or money with your expertise, then you deserve to charge accordingly.
Don’t forget that your knowledge didn’t come for free for you either!
Lots of entrepreneurs who go into a new business, almost discount their experience in other areas as totally irrelevant, which is a mistake. All of your experience counts if it helps your clients get results.
It’s easy to forget that learning your craft actually cost YOU money and time too. Your investment in yourself saves your clients time and money.
Your clients are borrowing your years of training, so they don’t have to learn through trial and error themselves. They are paying you to short-cut their success.
Remember to factor that into your pricing – experience equals the right to charge more for what you offer.
Factor #2: Demand
Are you so much in demand that you’re booked up for weeks, if not months in advance? Well - it’s time for a price increase.
Are you back to back to back with no time to break for a cup of tea or even a pee? I’ve been there!
In fact, I used to get up at 5am for my first international client of the day and had client sessions all day with no buffer in between to eat or go to the loo. That’s really not sustainable.
If you’re super popular, it’s a textbook sign that you’re ready to put up your prices. In fact, you can increase your prices, and the demand probably won’t drop off that much.
TRUST ME ON THIS.
I’m not going to lie. Not everyone will stay a customer with you. Every time you increase your prices, you’ll lose some clients who are no longer in alignment with your rates – and that’s okay.
Even if you doubled your rate, and even if you lost 50% of your client base, you’d still be making the same money, only working half as much.
Honestly, your business could easily withstand a 10-20% price increase without losing too many clients at all.
Some might even be willing to pay extra for a VIP option where they can get access to you straight away, rather than waiting in line.
But the principle is – if you’re booked out, you can totally justify raising your prices because you’re probably getting amazing results for your clients.
Factor #3: Awesomeness
This one’s the awesomeness factor!
Are you just really, really good at what you do? Well guess what? You can charge an awesome price for it!
If you get amazing results for your clients and they rave about you… you can totally justify charging a price that reflects those results.
After all, you can help save or make your clients a LOT of money when you’re awesome at what you do. And this isn’t just for business coaches by the way - almost every industry helps people improve their lives in a way that can translate into time or money.
It might feel icky, though. You might be thinking, “But Denise, what about the people who really need what I do but can’t afford me anymore?”
This is honestly the biggest reason why entrepreneurs resist raising their prices or charging premium rates – it doesn’t feel fair, and most of us were taught at a young age to be inclusive and friendly.
Here’s the great news: when you’re earning awesome money for being awesome at what you do, it frees up your time and creativity.
Then you have mental space and physical time to create products that are more accessible for those people who can’t afford your higher-end services.
For example - you could write a book, like I did, to take your message out to potentially millions of people in a low cost way. Writing a book honestly takes a lot of (unpaid at first) effort, but if you’re completely booked out (and burnt out), you won’t have time to ever do it.
Or when you have some headspace, you can put your methodology into a course (like my Money Bootcamp), so you can impact more people.
Or you can free up some time to do pro-bono work that’s funded by the amazing income you’re making!
It’s a win/win/win, too.
You make awesome money and serve more people.
So, Lucky Bee! These are my 3 tips on how to justify a BIG price increase in your business.
Really take notice of these three factors to figure out just where you should be pitching your prices – chances are that you’re ready to increase them today.
Don’t worry, it’s normal to be nervous about increasing your prices!
If you’re really struggling with justifying your prices, and need some help with it, I’m your gal!
If you’re wondering how to actually communicate it to your clients without them freaking out, then I’ve got a free resource for you to help you figure it out.
It’s my Ultimate Pricing Guide including my best pricing strategies, tips for scripts for talking to your clients and how to make this your best month ever.
Watch now at denisedt.com/pricing
Plus it’s totally free!
It’s your time, and you’re ready for the next step.
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