Dare to Consider Thinking About Maybe Possibly Raising Your Prices
Setting Prices is Scary
Pricing, especially for people who set the price for the product or service, and deliver the product or perform the service, can be very tricky. It’s easy to confuse the price you need to charge for what you make or do, with your self esteem.
You can combat this two ways:
1. Research what your competition sells their work for
2. Figure out how much value you deliver, and set your price at some fraction of that value.
Research is pretty easy to do: the internet is an unlimited source of pricing information; and even in the unlikely event that you can’t find an exact price for what you do, you can pick up the phone and call someone outside your area and ask what they charge for a similar product or service.
If you do this research, you’ll find that there is a huge range of prices for almost every product or service sold. People who go to the local barber shop and pay $11.00 (plus tip) for a haircut may be flabbergasted (or horrified) to know that you can pay $400 for a man’s haircut (and even higher for a woman’s cut). In my field, you can pay a coach $25 an hour, or $5,000, depending on who you hire.
Why would someone pay $400 for a haircut? Why would someone hire a coach for $5,000 an hour? Because they feel like they receive much more value than the cost they incur. Perhaps the $400 hair cut makes you look a lot better on TV, hiking your ratings and securing your contract for the next five years. Maybe the $5,000 coach showed you how to break through a barrier that had been blocking you forever, enabling you to triple your income.
Farfetched? The $400 haircut and the $5,000 per hour coach both exist. More than one person is willing to pay for these rates for that kind of value.
If you haven’t raised your prices recently, or if you simply want to expand your mind on the subject, read these blog posts.
www.fluentself.com/blog/biggification/the-art-and-science-of-pricing/
www.fluentself.com/blog/biggification/coming-up-with-prices/
http://www.shaboominc.com/blog/ (read the November 20th post called “Does Your Pricing Prevent Customers from Committing?”
Do you need to raise your prices? Are you afraid? What’s next for you?
Tags: Business Numbers, Pricing, Value
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Your observations relative to price are right on. The fastest way to impact profitability is to raise price. Every dollar of price increase goes right to the bottom line. As you say raising prices is always difficult particularly for existing repeat clients. The focus on price should be from the customer’s point of view and should be based on value. How much is your product or service worth to your client? It is from that perspective that you should set price. Early in my career someone gave me the sage advice that “price is set in the market as a function of what customers are willing to pay it bears no relationship to cost the only thing that costs tell you is if you want to be I that business”.