Three Ways to Raise Your Prices

Posted by: Today's Tip Contributor on July 6, 2010

Chance are that you started your business because you love to do the work. Whether it’s massage therapy, yoga instruction, or business consulting, you were taken with the idea of being on your own, enjoying a more flexible lifestyle, and building a business around your strengths.

If you’re like most service entrepreneurs, you quickly discovered that pricing your services is not easy. Since your business revolves around you, you may wonder: Am I really worth that much? You may dial down your price because you so enjoy doing it that you might even do it just for fun.

Unfortunately, as time goes on, many service entrepreneurs find that they have to give up on their dream because selling and pricing has turned into a nightmare. They simply aren’t earning enough to sustain themselves. What a loss. To avoid their fate and to learn to charge what you deserve, I offer the following tips:

1. Ask for testimonials and study them. Often service entrepreneurs take their talents and abilities for granted because they come naturally. If your clients are praising you, really listen to what they are saying and see the value from their perspective. Remember, value is in the eye of the buyer—not the seller.

2. Uncover pain before price. In a sales situation, it’s important to make sure you understand your client’s pain before talking about price. Customers simply will not see the dollar value of your offering unless they first feel comfortable enough with you to share their pain.

3. Plan to profit on the hour. Many small business owners charge hourly for their services. You can ensure that your rates are fair and reasonable to you by making sure that each hour of your work is fairly compensated. I recommend setting a minimum hourly amount that you will not undercut for any reason.

Pricing is more art than science. You can do it artfully if you listen to your clients and understand the value that they’re getting from you. You will often be surprised by how valuable your services are when you hear it straight from your client. With a clearer understanding of what your offering is worth, you can take steps to ensure that you are fairly compensated.


Michael Felberbaum
Founder & President
NumeSpot
Hamden, Conn.

Reader Comments

Boni Candelario

July 8, 2010 11:29 AM

Michael,

Very valuable advice, especially when so many of us are terrified of raising prices. I love your approach!

Thanks,

Boni

Stephen Brown

July 9, 2010 1:22 AM

Once you have a set price whether it is hourly or flat rate, you must raise your prices periodically just to keep up with inflation. If you wait several years and try to raise them a lot to compensate, you will give your customer sticker shock. You also have to take into account pricing differences with your competition. Give your customers a reason to pay you more. If a new competitor is on the scene and under cutting your price structure, differentiate with value added services or product you can bundle in. Just make sure your customer knows about it.

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