So it’s time to raise your prices…but whenever you start typing up that email to let your clients know, you freeze up with anxiety and the draft immediately goes into the trash.
You find every way to justify why you should keep your rates the way they are and get overwhelmed with the thought of everything that could go wrong if you add even just another dollar to your prices.
What will my clients think?
What if they’re upset?
Am I even good enough to be charging this much?!
I’ve been in those shoes plenty of times, my friend.
It seems like something we all go through as business owners, even if we know our income is no longer sustainable. But here’s what I learned in the transition from corporate life to entrepreneurship…
Scared money don’t make money.
If you lock yourself in panic mode because you’re scared of what may happen if you increase your prices, you’ll never bring in any real profit — which can wreak havoc on your business because as you grow, you will ultimately need more resources to sustain that growth.
But I promise it’s not as scary as it seems.
Today we’re going to take a look at when is a good time to raise your prices, how to fit that increase into your business model, and how to communicate that with your clients and customers so everyone walks away happy.
The cost of doing business has gone up
If the cost of doing business is going up, then it’s a no-brainer — it’s time to increase your prices.
The costs of goods and services increasing will mainly apply to product-based businesses, but service providers should still consider this one.
The material cost of goods will gradually increase over time, so if it’s been a few years since you’ve looked at what it costs for you to take a trip to Hobby Lobby, Home Depot, or wherever you get your materials from, you may want to pause and see how much things have changed before you make any other financial decisions.
Unless your cost base has gone down recently (which in this economy is highly unlikely), you’re probably making less than you think you are because of inflation.
Service providers — you’re not off the hook either! You may notice inflation impacting the process of your software or membership hosting sites, but don’t forget about any physical products you handle either.
Yes, time is one of the costs of goods factored into your services packages, but if anything physical gets sent out — like welcome packages, client gifts, or a simple card — you need to take a look into how the price of these things is impacting your net income.
Your booking and conversion rate have gone up
First of all — way to go! Go ahead and pat yourself on the back because that’s what every business owner dreams of having. That’s what we’re all working towards so we can bring home the bacon.
If that rate has increased by at least 80%, then it’s time to raise your prices.
This number is a bit higher than what you’ll hear many business coaches recommend, but I’m a planner, and as such, I tend to overcompensate.
The bottom line is if you’re consistently closing out those discovery calls and filling all of your spots, then it’s time to increase your rates.
Your hard costs aren’t equal to 40% of your offers
Hard costs — i.e. things you have to pay for to keep the show going — add up faster than you think. If you have VAs, contracted help, employees, are part of a mastermind or membership, pay for software… all of these things will factor into the cost it takes for you to do business.
You need to make sure your hard costs are about 40% of the overall charge of the finished product.
This hit home when I did the Blueprint Model from my friend Shanna Skidmore. It seemed so high at first. I thought, “There’s NO WAY I can do that.”
But when you break it down and see what you’re bringing in, what you have to set aside for big expenses like taxes and paying for the cost of goods, you start to get an idea of what your income will be.
You aren’t priced competitively
There’s no reason you should be significantly undercharging what your competitors are offering.
If you know your skills align with what other people on the market are offering, if you find yourself looking at a competitor’s work and saying “I could do that too!” then you need to price yourself accordingly.
If your pricing is on the lower end of your competitors, but you still have a conversion rate of at least 80%, it’s time to reconsider what you’re charging.
You haven’t raised your prices in a while
If you haven’t raised your prices in about a year and a half, it’s time to make a change.
I know how scary that can feel though. You don’t have the excuse of inflation or an increased cost of goods to back you up on this one.
About a year or so ago, I had a financial meeting with my husband and he realized that I haven’t raised my prices for quite some time.
When he suggested that I increase my rates, I thought of a million and one excuses as to why I shouldn’t do that.
I won’t list those million and one excuses here (because we’d be here allll day) but if you can relate to that, I understand where you’re coming from.
However, when I did finally face my fears and up my prices, I noticed that it wasn’t as scary as I thought it would be.
I had set in my mind that my clients were going to go haywire and hate me for it, but I saw that it ended up having little to no effect on my booking average.
The bottom line is, that there are people out there who are willing to pay your rates. Your time and energy are valuable and it’s okay to price yourself accordingly.
How to communicate changing rates with your clients
When you raise your rates, you’ve gotta be firm in them. You work hard and there’s a reason that you’ve raised your rates. But that doesn’t just mean you can leave your clients in the dark about it.
Your price increase is also impacting their lives and their businesses.
If you want to efficiently communicate why you’ve raised your prices, show them what the benefit will be for them. How are they going to get better results? How are they going to get a better product?
Effectively communicating the increase in your prices also comes with knowing your audience well.
Understanding the motivating factors behind your clients’ buying behavior can really help you best communicate the value of your services to them.
With that being said, there are still some best practices that should be implemented no matter your industry or what type of buyer persona you have in your target audience.
Start at the back of the funnel
Go from the very beginning of the client experience and work your way through the entire journey.
Start with the first things they see — your website, your booking process, etc. — and go through each step — the proposals, the contract, the payment plan, the sales call scripts — until you’ve hit the final step of conversion.
This is not only a best practice logistically (how confusing would it be to have your updated rates in one touchpoint but not the other?) but it helps you gain a renewed understanding of what your buyers experience on the road to working with you.
It can help you work out any issues and help you continue to service your clients and customers well.
That may include a few changes on your end. Maybe you haven’t always listed your prices on your website, but with your updated pricing and a deeper understanding of your clients, it may be time to do so.
Grandfather people into your membership
If you’re running a membership or an agency-style business model, you can grandfather people into your pricing model.
This means existing customers can continue to pay the same price, even if it increases for new members and clients.
Sell your sawdust
What can you easily add to your offers that doesn’t cost you much more time or energy?
It doesn’t have to be one of those big, final deliverables, but instead something you can easily bundle with your offers to show your clients that you value your relationship.
Invest the price of what you do into someone else’s service or product
If you’ve never invested the price of your product or service into someone else to go through the client experience to see what it’s like to receive your offers, I highly recommend doing so.
It’s an opportunity to educate yourself on what the client experience is like each time you raise your prices.
Are your services worth the increase? Are your products reflecting the quality that comes along with a higher rate?
If you’re offering something new, you could even try beta testing to see the value in it.
Grocery store receipt your offers
Whenever I raise my rates, I go through and line item every single deliverable and figure the cost of goods that go into it. When I do this, not only am I more aware of the details behind what I’m offering but so are my clients.
I add all these numbers up, for each item, to determine the total cost of what I’m offering. I start to see the bigger picture, and it usually helps me feel more confident in raising my prices.
My secret sauce for presenting my new prices
Customers don’t just buy from any ol’ stranger on the internet.
There’s a lot that goes into moving them down that funnel and leading them to the point of conversion, and you’ve got to be there to guide them down that path.
So if your sales page can’t beckon someone in your target audience to buy from you, then who will? If you don’t clearly anchor your prices and execute a clear offer, you’re pretty much just leaving money on the table.
It’s time we put an end to that and help you present your new pricing with authority!
The Sweet 16 Method is what I use in my own business that’s helped me write sales pages that have generated upwards of $500K in a single launch!
It’s also the very framework I use inside my membership, Copywriting for Creatives, to help thousands of creative entrepreneurs write sales pages that convert.
And now, dear friend, I’m dishing out that very framework inside the Sweet 16 Sales Page Template + Copywriting Workbook.
Get a step-by-step template that helps you structure a high-converting sales page that not only fits your brand voice but is chock-full of all those juicy details to help your clients understand the value of what you’re offering.
Here’s what’s included:
- A printable and digital copy of the Sales Page Sketchbook for gathering everything you need about your offer.
- Instant access to the Sales Page Primer Party Starter Copy Generator, a tool to fire up HUNDREDS of combos of sales copy prompts
- The plug-and-play 27-page Sweet 16 Sales Page™ and Services Page Template both to walk you through writing EVERY one of the 16 sections your page should include
- A 15-minute sales page assessment to make sure your sales page is ready to go live
- The Conversion Design Teardown Training + Idea Bank and Launch Metrics & Goals Tracker Pack to help you stay en route to landing your dreamboat clients with copy that converts
I’m ready to help you get those sales whenever you are! Snag the Sweet 16 Sales Page Template + Copywriting Workbook here!
Reading Time: 7 Minutes Reading time: 8 min. So it’s time to raise your prices…but whenever you start typing up that email to let your clients know, you freeze up with anxiety and the draft immediately goes into the trash. You find every way to justify why you should keep your rates the way they are and get overwhelmed […]