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When (and How) to Raise Your Prices
Sometimes, when service providers get overbooked, they complain about it. Oh, how easily we forget what it was like when we were struggling our way up the ladder. Moreover, I’ve witnessed many a service provider resist raising prices, which might allow them to work with fewer clients, for fear of loosing business as this simple story will illustrate.
A have an acupuncturist that I see from time to time. He might be the best known acupuncturist in my town. He’s certainly the most experienced and has an overbooked practice because of it. Every time I see him he complains (in a nice way) that he’s overworked and can’t keep up with demand. He doesn’t want to change the model of his business, in that he still wants to see patients himself and doesn’t want to manage other acupuncturists, but he resists raising prices, nonetheless. So, every time I see him, I complain to him (in a nice way) that his prices are too low and, in fact, should be doubled. His answer is always the same, “But, Michael, if I double my rates, I’ll loose half my clients.” I’ll pause here to let that sink in. First of all, he won’t loose half his clients but even if he did, he’d still make the same money and have twice as much free time. More likely, he’ll lose just a few clients but make much more money because he doubled his prices.
If you do raise prices, it’s a good idea to let clients know why. There’s nothing wrong with saying that you’re fortunate to be in high demand and are raising your prices so that you can give more attention to your clients. Or, that certain expenses related to serving your clients have increased and you’re raising your prices accordingly. People like the truth. I’d prefer to be open and honest with my clients, running the risk of disappointing a few of them, then be manipulative or obtuse, running the risk of damaging my soul. Just be sure to let them know what the new rates will be and when they go into effect. Give them reasonable notice and consider giving them lots of advance noticed so they can adjust to the changes. And, most importantly, remind them of the continuing benefits they’ll get from working with you.
On the flip side, you don’t always have to carry over all costs or eek out every bit of profit on every sale. Sometimes you can earn long-term marketing juice by taking one in the chin for the sake of your clients. My son’s favorite pizza place is an organic one called Jules Thin Crust Pizza. At one point last summer the price of cheese went down. Now, the average customer is not going to know this. I eat cheese but I don’t buy it in bulk. It would have been easy, and cheesy (sorry, couldn’t resist), for Jules to just pocket the extra profit from the savings. But no, instead, they put up a big sign announcing the cheap cheese and that they were lowering prices because of it. All summer, their busy season, no less, prices where reduced. I asked the owner, John, whether the cheese experiment cultured nicely or stunk up the place (sorry, again, couldn’t resist). He said it was a huge success as a day did not pass without a multitude of “thank you’s” being tossed his way. Now, John’s not the type to boast about sales but I’m pretty sure he saw more business because of his gastrointestinal stimulus package.
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Wow, it was like this article was written just for me! I am a busy Acupuncturist currently with a wait list and usually coming in early and/or staying late many days. I am also just completing my life coach training with Martha Beck and have launched my coaching practice. Feeling a wee bit overwhelmed! I did raise my prices slightly in January of this year but not substantially. Maybe time to consider a larger hike?! Thank you for the push!! I needed to hear it again.
Thats one of that publish which it’s worth to bookmark. Actually good publish.