If you feel as though your business venture has reached a point where it would be safe to increase the fees charged for its services, then you will probably be right to do so. However, if this is not done in the right way and at the correct time, it can backfire massively and have devastating effects on even the strongest of business models. Therefore, we want to talk you through it all and ensure you go about it in the right way.
Are you worried about making a change?
Perhaps you are concerned about how to tell clients about an upcoming fee increase, or possibly you are worried that it will force them away and into the hands of your competitors. These thoughts are common among small business owners who are looking to change the price of their services, though the truth is that this is business.
Most people will be rather understanding of a price increase, but only if it is communicated by the business to the consumer in the correct manner.
Test the price increase first
One way to find out if you are ready to increase your fees is to test out a new pricing point before implementing it fully. Start with some of your smaller clients that you wouldn’t mind letting go of if you had to, rather than hitting your biggest spenders in their pockets right away. Once you’ve got a few price-changing conversations under your belt, you will soon start to feel more confident.
This will lead you on to having discussions with your bigger clients and going into them with examples of how you have already implemented these changes elsewhere.
Fee increases often fuel times of uncertainty within a customer base, but if you do everything you can to talk through the increase in the appropriate manner, you’ll soon find that you won’t lose nearly as many clients as you may have first believed you would. The difficulties surrounding a price increase rarely have much to do with the price itself and stem more from how to tell clients about a fee increase.
Though, this shouldn’t be something you have to worry about; you are the leader of your own business, and this is just another decision to make, like so many others.
There’s an unfair outlook on small businesses.
Bigger brands do this all the time, and we consumers hardly even pay attention to it. But then, for small business owners and freelance workers, raising costs can be unbearable. Perhaps this is on the grounds that, when we work alone or in a little group, price points feel far more personal when compared with the huge corporations of the modern world. In the event that a customer dismisses our costs, it can feel like they’re dismissing us.
On the off chance that we move away from the feelings related to rising costs, it is totally sensible to anticipate that your charges should increment yearly in accordance with inflation. There’s nothing amiss with needing to take care of the expense of living or from needing to be paid more as your experience further develops, and your administrations become more sought after.
Besides, you have likely worked hard to develop your skills and knowledge, as well as invest a lot of your own money along the way. So, there is no reason you should not be able to increase the costs of your business’ services over time.
You will lose some clients along the way.
Ideally, you would be able to put your prices up without losing a single client, but that isn’t how the business world works. Many clients and customers of yours will shop around for the cheaper alternative once your prices go up, and you cannot blame that for acting that way. It is less of a personal jibe at your venture and more to do with their own personal budgets.
You should always attempt to put the shoe on the other foot and see things how your consumers might. If there was something costly that you wanted badly but couldn’t afford right now, would that make the item bad? Instead, it would indicate that you need to look elsewhere for now. You should also recognize that, although you cannot buy the item at this stage, there are people who can afford it and the product is perfect for them. These people will replace the clients and customers that you lose.
If a client does decide to go elsewhere, it is vital that you don’t take this to heart and feel personally attacked. There aren’t many businesses that can say they maintain lifelong customers in today’s society. Plus, if you do lose a few customers, try to see it as freeing up your time to find new clients who will be more than happy to pay the new fee you are charging.
Tell people why your prices are going up.
Most business ventures increase their fees due to a growth in sales or an overall improvement in levels of custom. This indicates to them that there is now more demand for their offerings so that they can charge people more for them. If demand is high, prices will normally follow up and increase themselves.
You should always avoid suggesting that you are increasing your prices to boost your profit levels. Clients will not want to pay more without understanding why it’s necessary to your business or how it will make a positive difference to them as consumers of your products.
Instead, inform your customers and clients that you have been offering an ever-improving service to them, and the new price point is a fairer reflection of what you have to offer. Also, let them know that you do not intend to change it again shortly and that the price will be staying the same for a long while.
So, what’s holding you back?
From the possibility of losing clients to being faced with awkward conversations and knowing how to implement the new prices, we understand that increasing fees comes with its own unique set of challenges. However, when it comes to running your small business venture the right way, you cannot afford to undercharge for the services you provide.
Don’t hold yourself back and risk losing out on huge profit margins all because you couldn’t take the leap of faith required to hit your customers with a new price point. Suppose you have been collecting experience and developing your business over the years. In that case, there is no reason why you should not be able to implement a new pricing structure into your company.