There comes a time for every small business to raise their prices. While it may seem scary, remember that it’s your job to keep prices fair, both for you and your customers. That means you have to charge prices that work for you and allow you to remain in business.
Read on for six reasons to raise your prices.
Your costs have grown
The thing about inflation is that everyone is going to feel the pinch – including you. If your business supplies are now more costly than they were before, you have to pass those costs on. Otherwise you’re the one losing money, and your business will be on the hook for it.
Nobody likes raising prices on their customers, but at the end of the day, it’s a necessity. You have to be able to cover your costs and continue supplying your customers with what they expect.
You’re too busy
If you find that you’re consistently booked 7-10 days out, it’s a sign that you’re delivering good value for money. People know your worth and are fighting for your time. That’s great! But it also means that your business has evolved.
This tells you that your customers are satisfied. And if they’re satisfied, they’ll likely spend more for your services. You may lose some clients in the process, and that’s okay. You’re now attracting higher-quality clients who know your value and are happy to pay more for it.
Beware of getting carried away, though. If you raise your prices by too much too fast, without adding any value, you’ll find yourself in trouble. As your skills improve, you’ll automatically provide more value for money. This is when raising your prices is justified and will be met with acceptance.
Enough time has passed
Even without adding on more value or skills, it’s okay to raise your prices regularly. In fact, it’s recommended. A good general rule of thumb is to raise your prices by 5-10% every year and a half or so.
This may sound like a lot, but consider that the average rate of inflation falls within this bracket. If you don’t raise your rates, and the cost of your supplies hasn’t gone down, you’re losing money.
Your competitors are doing it
Yes, it feels great to be able to offer your customers a fantastic deal. But don’t be the one left with rock bottom prices when your peers have all raised theirs. This translates into you working harder to earn the same amount of money.
Be aware of what’s going on in your industry and adjust. Customers judge a business based on perceived value. If you’re at the bottom of the pack price-wise, they’re likely to skip over you to get good value. Price yourself accordingly to attract quality clients.
You’ve become more valuable
As you work in your field, you gain more skills, experience, and knowledge. This translates to more value. If your business is better than it was a year ago, it’s time to charge accordingly.
Don’t undervalue yourself. Most of the time, customers understand that you’re more skilful and are glad to pay for your extra expertise.
You’re trying to rebrand or reposition your product
There may come a time when you want to attract more high-quality, higher-paying clients.
One of the most obvious examples where you see this is in the restaurant industry. As a place becomes more sought after, you’ll notice that they change the menu to make the descriptions more detailed. Maybe a popular item will undergo a name change to make it sound fancier. But one thing’s for sure – the price tag will have definitely gone up. This is a rebranding meant to raise perceived value, and the prices along with it.
There are many reasons why it’s a good idea to raise your prices. It’s just good business sense. Likely you’re experiencing a combination of the reasons listed above. Whatever the case, make sure you do your research and review your prices often to make sure you position your business correctly.