How to Increase Your Prices

How much do you charge your clients?

One of the biggest sources of anxiety for solopreneurs is determining exactly how much to charge for their products and services. As an entrepreneur, you probably feel that if you charge too much, you aren’t going to be able to build up a customer base. But don’t forget that if you charge too little, you’re not going to be able to make ends meet. And you deserve to be successful, and that definitely includes monetary success!

The pricing sauce secret is (obviously) to find the sweet spot where you’re offering clear value that your clients appreciate and that you’re properly remunerated for it. The “this porridge is just right!” price point where your customers are happy to pay, and you’re making a profit.

Even if you got your pricing exactly right when you were first starting out, with the rising costs of—well—everything, you’re eventually going to have to increase your prices to keep your business profitable.

Self Evaluation: Don’t Underestimate What You’re Worth

Do you know what your services are really worth to your customers? There’s a chance that your prices may be lower than you think.

A good way to determine whether or not your prices are too low is to check out your competitors. If they’re offering similar services, but for considerably higher rates, then you might be undercutting your own products.

Although customers are always looking for a deal, they certainly don’t mind paying a fair price for goods and services, so long as they feel they’re worth it. If your prices are already too low, raising them slightly likely won’t end in rebellion among your customers.

When It’s Time, It’s Time

If the time has come to raise your prices, you might be dreading it. You’re probably worried that your customers have gotten used to your prices and won’t understand why they have to pay more now for the same service.

Thankfully, a customer riot is unlikely. You just need to take the right approach in both how you make the increase and how you communicate it.

Do It Gradually

Raising your prices is a bit like entering a cold lake. It can be incredibly refreshing, but most people prefer to do it gradually rather than diving straight in immediately. Do that, and you may scream and jump right back out of the water again. But if you go in slowly, rubbing the cold water against your skin so that your body temperature has a chance to adjust before you hop in, then it won’t be that bad at all!

It’s the same thing with pricing. If you increase your prices too quickly, it’s going to be a shock to your customers. They’re going to get out of “the lake” as fast as possible. But if instead you gradually increase your prices over time, you can avoid a price shock and customer complaints.

It can be a good idea to “grandfather” your prices for your existing customers and just increase them by a reasonable percentage each year while offering your new full prices to new clients. That way, your original clients have a chance to adjust, and they also feel like they’re getting a deal.

Give Your Customers Advanced Notice

Another method for avoiding a price shock is to give your customers ample time to prepare for it.

If you have regular clients or customers who regularly purchase products from you, a sudden increase in cost could be a huge shock, understandably causing them to balk at having to pay more with little notice. On the other hand, if you give them sixty days or even three-months notice before you increase your prices, they can incorporate this increase into their budget gradually.

No one likes surprises, so be sure to avoid them when you’re dealing with your regular customers.

Another option that works very well is to offer a short-term grandfathered price. Do this by sending a notice out to your clients letting them know that your prices are going up on X date and give them the opportunity to snag your services at your current pricing for a limited time by giving them the option to pre-pay.

Start With a Lower Base Price, But Have Lots of Add-Ons

Remember the good old days of flying a few decades ago? You would get free headphones, a free little pillow, free drinks, and often a free meal. You could take two carry-on bags, along with two big checked bags. And everything was included in the price! These services were just expected to be included as part of the ticket.

Today, most of these extras and add-ons are sold separately, apart from the base price of the ticket. So now, airline fares are actually cheaper than ever (when you adjust for inflation) with discount airlines like Spirit and Ryan Air offering single digit airfares to members—and the membership fees are rock bottom too. But when you factor in the additional charges for checking your bags, in-flight meal, a drink, a little extra space, and, carry-on bags, that base price can quickly balloon into a very profitable number. It gives customers a choice, allowing them to select the add-ons that they want, and giving them the option to save money if they wish to forego some of the luxuries.

Justify Your Price Hike With Improved Services

Raising your prices gives you an excellent opportunity to improve your services across the board and increase the value that your customers receive. Offering an improved customer service experience can more than justify the price increase of your services or products. Since you’ll be collecting more money, go the extra mile to provide value-enhancing bonuses like increased service and improved customer experiences.

By justifying your price hikes with improved services, your customers will be benefiting from the additional money spent on your products or services.

Get Ready for Feedback

Even if you use all of these tips, you still might get some feedback from a few of your customers about your price hike. Some people just don’t want to pay more, and when they have to, they may grumble This is where expert customer service comes in.

If you have a customer complain about your newly increased prices, be sure to hear them out. Making sure they’ve felt heard is important. Pay attention to what their actual complaint is and address it directly. Maybe you’ve actually priced yourself out of their affordability level, or perhaps they aren’t feeling the value of your service. It may even be they just like to haggle. Whatever the issue is it’s important you address it directly.

You may consider throwing in something of extra value, like a small bonus service, a coupon, or a small discount on their next purchase to offset the difference in pricing, or delaying the price increase a bit for them. If you can do something to help them leave the conversation happy and satisfied, chances are they’ll come back again, willing to pay the current price without complaint.

For a business to be a success, prices will have to be raised sooner or later. It’s the only way to grow and expand your services, while also bringing in new clients. As your prices increase, so will your reputation and relationships. You just need to make sure that price hikes are done in a thoughtful way that will keep your customers content and coming back for more!

Have you increased your prices? What was the response from your customers? Tell us about it in the comments below!

Related Article: 1+1 = 3? Why & How to Scale Your Small Business

Meet your host

Sandra Booker, Founder of Changemaker Inc. (home to Sidekick COO and The VA Studio) and creator of Scale Society and The Advisory Board, is a mentor, Fractional COO  and growth strategist. She specializes in helping overworked, overwhelmed, multi-hatted entrepreneurs become the CEOs of sustainably scalable, and powerfully profitable businesses. 

After helping local businesses thrive, and receiving accolades in her community (like the 40 Under 40 award) Sandra turned her attention to the world of online service providers, and her clients include familiar names like Chanti Zak, Tarzan Kay, and Laura Belgray.

In her (efficiently used) spare time, she teaches others how to build and grow their own 6-figure virtual assistant practices and is on a mission to create a million jobs by helping her clients and students scale their businesses.

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