Should I Implement A Price Increase for my Services or Will I Scare Away Customers?
One of the most controversial things we recommend to our clients is to do a price increase about twice a year. Many times we get pushback. People are afraid they will infuriate their current clientele and scare away future customers. We say, you get what you pay for. And although we do not advocate doubling your fee, we do recommend a small price increase to help not only drive urgency but also help keep your margins steady.
The Cost of Doing Business Is Going Up
The price of everything from office supplies to your internet provider goes up. Chances are you are getting hit with annual increases from many of your vendors. We are not recommending passing along the increase to your customers every time it happens. Instead, if you increase your price on a semi-annual basis you will hopefully be covering your losses from your increasing costs.
You Work Hard, You Deserve a Raise
As a small business owner, the only way you get a raise is if you create one for yourself. Just as you likely are giving your employees a small annual salary increase, you as the business owner deserve one too. After all, you are the heartbeat of the company. You are the one answering calls in the middle of the night and putting out fires, literal and figurative. By setting a small price increase you are communicating to customers that you are worth it.
Price Increases Create Urgency
As human beings we are always looking for a good deal. We always want to find the lowest possible price. If we know we are paying even a dollar more tomorrow, we will buy today. Use this psychology to boost notoriously bad sales months. If March is normally a very slow month, advertise a price increase April 1st. You will drive people to get in before the increase, in turn creating a great sales month.
Most people understand a price increase
Many times our customers tell us they don’t want to raise their prices because they are afraid of the response they will get. We argue that until you raise them you will never know. More times than not, when we have a client raise prices, their customers never mention the increase. Do you freak out when you go to the market and see that milk has gone up another 25 cents? If you are anything like me, you will silently curse the increasing price of the world and then grab the milk and pay for it. People are used to seeing price increases. You will likely be surprised by the lack of pushback you get.
You Get What You Pay For
Remember when gas was $1.00 a gallon? What would you do if you saw a gas station offering regular gas at $1.00 a gallon today? After an initial double take, you probably would think to yourself, this is too good to be true, something must be wrong with their gas. Same goes for any other service. You get what you pay for in life. If you haven’t implemented a price increase in years, you are likely pricing your services lower than the market. And while that may bring in some cost comparers, it is not helping your image or bottom line.
In summary, by raising prices you are not only keeping current with the market and your costs, but if timed properly you will drive business during a traditionally slow period. For more tips on running your small business or medical practice, visit www.yellowtelescope.com or www.seoversite.com.
