• Title

  • 7 Ways to Know It's Time to Raise Prices

    7 Ways to Know It's Time to Raise Prices
     
    The tongue and cheek answer to this question is that it's time to raise prices when your
    revenue is no longer covering your expenses.
    But don't ever wait that long!
    Instead, you'll want to raise prices long before your business revenue is causing you to
    have sleepless nights.

     
    Here are 7 ways to know it's time:
     
    First, as the business owner, it is within your discretion to raise them at any time.
    Some businesses raise them every year, some like grocery stores or gas stations,
    raise them whenever supply and demand require it. But if you're one of those businesses
    that hasn't raised them in over a year, I'm talking to you.

     
    Consider the following:

    The Market Supports It

    If your product or services are on the lower end of a bell curve, it benefits you to raise them.
    While you may believe low price differentiates your business from the competition,
    so does going out of business. Do some research to see what others are charging.
    You can still stay on the lower end but never be the lowest.

    Your Services or Offerings Have Changed

    Sometimes the market dictates that you bring additional services under your umbrella or
    the industry embraces doing things in a different way than when you first started your business.
    Maybe your products are more heavily regulated or maybe the process you take requires
    more steps. If something has changed, and you're offering more, you can charge more.
     

    You Offer More Value Than the Competition

    Everyone wants a good price but you can price yourself too low. If you do, it will begin to
    affect the way in which people view you and the quality of your services and offerings.
    Think about the value you offer your customers then price your goods and services accordingly.
     

    Your Target Market Has Changed

    Think about car manufacturing businesses. Most have an economy line/brand and a
    luxury brand. They're owned by the same parent company and sometimes even use the same
    chassis in their designs but their market is different. If you are rebranding and want to enter
    a new market, like making the switch to a luxury brand, you will have to price your goods
    or services accordingly.
     

    You're Getting New Brochures

    If you include pricing in your brochures and you're ready to do a print run, consider your
    business pricing. You'll save yourself some money if you increase prices and
    then run
    your brochures with the new pricing.
     

    You've Hit Your Production Ceiling

    Whether we're talking goods or services, if you can't produce any more in the time you
    have or with the money that you have, you've reached a revenue ceiling. If you're content
    with your current salary at that revenue ceiling, don't raise prices. If you're not, do the research
    and start thinking about it. You'll either need to do that or change your offerings in some way.
     

    You Offer Something Nobody Else Does in a Way No One Else Can

    There are plenty of entrepreneurs out there who have cornered the market doing something
    no one else wants to touch. For instance, a street sweeper at the turn of last century could make
    a good living removing horse manure from the streets and selling it to farmers. It's an icky job but
    one with little competition. If you have a niche like that, congratulations. Now name your price.
    If you don't, you can always consider what you could do to drill down to find a need in the market
    and become the only
    "street sweeper" out there.
     
    Finally, if you're hesitant about raising prices, try it anyway, assuming you've done your research
    and the market supports it. If you're a service business call your clients and tell them of the change.
    Don't email or write a letter. Explain that you are simply competitively pricing your offerings and
    underscore that the competition is still higher by 10-20%, even with the new pricing structure

    (assuming they are). Remind them that you've enjoyed having them as a customer and you value
    their loyalty. Because of this, if they hear of anyone offering services for less than you do, you will
    price match, or whatever guarantee you feel comfortable with.

     
    While no one wants to hear of a price increase, most customers expect it at some point. If you fail to
    meet their expectations, eventually they will wonder why you are priced so much lower than everyone
    else. And the bias around
    "getting what you pay for" will negatively influence their views on your services.
     
    Christina R. Green teaches small businesses, chambers, and associations how to connect through
    content. Her articles have appeared in the Midwest Society of Association Executives’ Magazine, NTEN.org,
    AssociationTech, and Socialfish. She is a regular blogger at
    Frankjkenny.com and the Event Manager Blog.
    She’s a bookish writer on a quest to bring great storytelling to organizations everywhere.

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