In every small business’s life, there will come a time when you will need to raise your prices. This may seem scary, but you need to remember that you must keep the costs fair not just for your customer but for yourself as well, which means that you will have to charge prices that will allow you to remain in business.
Read on for six reasons to raise your prices.
Your costs have grown
The thing about inflation is that everyone is going to feel the pinch, including you. If your suppliers are charging you more, you will need to try and find the extra money to cover them elsewhere, which usually results in putting up your own prices. Otherwise, you’re the one losing money, and your business will suffer because of it.
Let’s be honest no one wants to raise prices on their customers, but at the end of the day, it may be necessary to keep yourself in business. You need to be able to cover your costs and continue supplying your customers with what they expect.
You’re too busy
If you find that you’re constantly booked a week to two weeks out, it’s a sign that you’re delivering good value for money. Your customers know your worth and are fighting for your time. That’s fantastic! But it also means that your business has evolved.
Being booked out in advance tells you that your customers are satisfied and happy with your service. Satisfied customers are more likely to spend more for your services. However, you may lose some clients in the process, remember that’s okay. You’re now attracting higher-quality clients who know your value and are happy to pay more for it.
Beware of getting carried away, though. Don’t raise your prices by too much, or too fast. Without adding any value, you will find yourself in trouble. Over time your skills will improve, and you’ll automatically provide more value for money. Raising your prices can then be justified and will also be met with acceptance.
Enough time has passed
Even if you aren’t adding more value or skills, raising your prices regularly is still okay. It is actually recommended. The general rule of thumb is to increase your prices by 5-10% every year and a half.
This can sound like a lot, but consider that the average inflation rate falls within this bracket. If you aren’t raising your rates and the cost of your supplies isn’t going down, you’re losing money.
Your competitors are doing it
We all know it feels great to be able to offer your customers an amazing deal. But don’t be the business left with rock bottom prices when your competitors have all raised theirs. This translates into you working the same amount to earn less money.
Keep updated on what’s going on in your industry. Customers judge a business based on perceived value. If you’re at the bottom of the pack price-wise, they’re likely to skip over you; they might think your prices are low because you don’t have quality service. Price yourself accordingly to attract quality clients.
You’ve become more valuable
You gain more knowledge, skills, and experience as you work in your field. This equals more value. If your business is better than it was a year ago, it’s time to change your prices accordingly.
Never undervalue yourself. Most of the time, customers will understand that you’re more skilful and will pay extra for your expertise.
You’re trying to rebrand or reposition your product
There may come a time when you want to attract more high-quality, higher-paying clients.
One of the most notable examples where you see this is in the hospitality industry. As a restaurant becomes more popular, you will notice they will make changes to their menu in particular and make it more detailed and fancy. A popular item may undergo a name change to make it sound fancier. One thing is for sure, the price will have definitely gone up. Rebranding is meant to raise the perceived value and the prices along with it.
Final thoughts
There are numerous reasons why raising your prices is a good idea. It is good business sense. You will likely experience a range of the reasons listed above. Whatever the reason, make sure you do your research and review your prices regularly to ensure your business is positioned correctly.
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