Raising Your Rates: Why you should & how to do it right
We can’t escape the headlines about inflation right now. As a business owner, you’ve probably noticed your own expenses steadily creeping up as the cost of everything is on the rise. Which means it’s time to re-evaluate your own pricing and make changes to stay profitable yourself. Easier said than done, right?
Thankfully Fractional CFO and money pro Jennifer Armstrong shared some practical tips for making price changes in your business.
Q: Inflation is causing many business owners to raise their prices. What are some signs it’s time to change prices of services or goods you provide?
A: Business owners can raise their prices whenever the fuck they feel like it. You don’t have to have a reason, but right now inflation is certainly a big reason to do it. But it’s not the only one. Some other reasons you might need to raise prices:
Your prices are so low they don’t communicate the value to your ideal consume
You’ve learned a new skill that has improved your services or delivery of your product
You’ve invested in a new tool or piece of equipment
You’re fully booked out and would like to work less
The first thing you need to do is evaluate your own numbers. Understand, first, exactly how much money you need to be able to pay yourself first, cover all your expenses, and save for taxes and other future investments. Once you know the exact amount of money your business needs to generate each month, you’ll be able to evaluate what you need to sell to hit that number with how much time, space and energy you have in a calendar month. From there, you’re able to adjust your prices accordingly with confidence.
Q: How can owners compassionately and confidently share these price changes with customers/clients?
A: The confidence has to come first. When a customer knows your “why” for something, it’s easier for them to understand and accept it. Get clear about why you’re doing it. Is it to be able to keep your business running when your own expenses are going up? To be more present for yourself and your family? To have less stress? Find a reason that feels good to you and you’ll be able to be clear and confident. Bonus: you leading the way and being vulnerable with your honest “why” will empower others to know they are capable of doing the same thing for themselves (added value for the people you serve!).
Q: What can business owners do to prepare for push back to price changes?
A: There are going to be people who don’t like the change or walk away feeling they can find something cheaper. Remember those decisions are not personal and they’re rarely ever about you. Your job is to charge the amount that makes you a living, not the amount that satisfies every customer. Your prices should be aligned with your personal investment in your work.
Be prepared to lovingly and confidently let clients go who are not prepared to embrace this change. Trust that you can handle what feels like rejection in the moment to overall have more peace and have the clients and customers who understand your own worth.
Find more tips from Jenn when you follow her on Instagram @jennjarmstrong
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