Generosity is a beautiful thing. But that doesn’t mean you should give away money to business customers who aren’t even asking for a handout. This is exactly what you’re doing, though, if you charge less than the value people are willing to pay.
Business owners are always reluctant to raise prices. They worry that charging more will bring customer objections.
Whether you’re an independent freelancer with a few clients or a small business with several employees and many customers, your concern about hiking prices is unfounded.
If you are raising prices, start a smooth transition with specific communication to customers about what your business offers. Avoid vague generalizations about your business that create difficulty in raising prices.
For example, most photographers present themselves as specializing in weddings and social events. Their websites and showrooms display photos from these activities. The specialty justifies higher fees, which they still charge even for simply shooting a portrait.
Your attorney probably focuses on a particular legal area, such as complex real estate law or employment law. He or she will still prepare a simple last will and testament for you, but the hourly rate will be the same as what he or she justifies as a specialist.
Bookkeepers who promote themselves as catering primarily to doctors and similar professions also generally charge higher fees. They still accept business from other industries, but at a higher fee because they target specialized services.
A simple method to justify rate increases is to make them a regular part of business. This eliminates waiting for the right time to raise your prices. Instead, you simply schedule increases as a cost-of-living factor. You remove having to explain sudden price changes, but you have a simple reason if anyone asks.
An especially easy way to change prices is by providing variations, depending upon the type of purchase. Retail establishments do this all the time by giving discounts at particular times of the day or a bargain price but a small unit size. Service businesses can copy the approach by charging not only hourly rates but also weekly retainers or creating monthly contracts for limited services.
A corollary to this approach is offering tiered pricing. Charge more for the first hour of service. Give a 50% discount for buying three items or give the fifth one free.
Offer home delivery or setup for an extra fee. Allow customers to decide if they want to pay more for rush service. Your good customers want the best and are willing to pay extra for it.
Innovative businesses offer differential prices to members of a special buyers’ club. They provide discounts to visitors on the website or social media pages of the business.
This improves marketing exposure for selling new services or products.
Exposing customers to closely related items makes them purchase more. Your business increases revenue per person without really charging higher prices, because of the discount.
There is no such thing as a fair price for any product or service.
You can determine your value only by trying some of these price-raising approaches.