Updated: Sep 24, 2021
Photo by Sharon McCutcheon on Unsplash
You want to make more money right? Everyone does. You might be wondering how you can raise your prices, and I'm here to help. It all comes down to three important steps that I’m about to spell out for you. Ready to make more money? Keep reading.
Determine Your Cost of Doing Business
If you’re earlier in your business or just trying to get to the next stage, you must have figured out that it’s time to charge more. It’s time to start charging premium prices. Your first order of business is to figure out how much it costs for you to do business, and also the cost of goods sold. The first step is to calculate what you should be charging for your products and services. We have a video on our instagram that details this exact process. You can watch the video by clicking here. You can use this guide from our instagram, pricing guide.
There are plenty of calculators that can be found online. Regardless, it’s time to calculate the price. Here’s an overview.
Calculate your Personal Expenses
Calculate your Business Expenses
Calculate your Sales Goal
Figure Out How Many Clients You Need to Get To Crush Your Sales Goal
Build Your Main Offer based on Your Sales Goal
Once you’ve built your new price, add an extra 3% for merchant fees if you're doing business online.
Why use this method to calculate your prices? Once you look at all the numbers, you’ll notice that you might actually be losing money and that’s what you don’t want. That project you did for $50? You should have charged $300. Don’t sell yourself short based on what you think people will pay you. Let your services speak for themselve. If that doesn’t make you want to change it up, I don’t know what else will. When we have this talk with clients, the response is always the same: “Holy crap, I’ve been losing money all this time!”. And they never turn back. Don’t miss out on your money. You deserve it!
Photo by Morgan Housel on Unsplash
Increase At A Regular Rate
Now let’s talk about actually raising your prices. Let’s say you have a service priced at $100, but you want to start charging $3000. The jump can seem scary, but don’t let it scare you off. You could make the jump, but that may be hard, especially from the people we’ve talked to about raising prices. One thing you can do is to increase your growth at a consistent rate, or even double it with every quote. In due time, you’ll get there. If you’re at $50, next time is $100 and so on. A steady increase is less daunting and you’ll still see results quickly. It’s up to you when you want to stop.
However, you need to make sure that your service is valuable for the price. Make sure you’re raising the price on services you know people will pay for and value. Don’t try to market that product you threw together in under 5 minutes at a large price point because you read it was a good idea. Most people we talk to are impact driven, and struggle to take that price leap. If you just want to make quick cash, this blog post isn’t the right one for you. Charging millions of dollars for something you threw together doesn’t provide value for anyone. So make sure you have the services or product to back up the price.
Make Them Feel Their Pain
It’s also important for you to establish the difference between value and price. Price is just the perceived value of a good or service. When a potential client can see the value in what it is you’re offering, they will find it worth the price. Think about how you might shop for your clothes and shoes. You buy certain brands because you find value in them, right? Or maybe you avoid big brands because you don’t see the point. That’s how you have to think about clients. They will absolutely pay for what they think is worth it.
When you connect with a potential client, you aren’t just selling to them. You’re assessing and seeing if your products and services can help them. The easiest and most effective way to do this is to just ask. Make sure that you find their pain points and allow them to sit in that pain. Bring up your price point first, then make sure you let them sit in their pain. Ask them questions like “What have you tried?” or “Have you hired someone to help before?” When you force them to think about all the things they’ve tried, their mind is going to say “Oh crap. I really do need help.” It really hits the nail on the head and shows them why they need you.
Now It’s Time
Let’s do a quick recap of what you need to do.
Run it through a pricing calculator to know what it costs your business to make it. 9 times out of 10, you’re losing money. Knowing what it costs to make should be your incentive to charge more.
Increase at a regular and comfortable rate. That rate could be 5% if that’s what you’re comfortable with. Every time you say it, increase it.
Make them feel their pain. Ask the questions that will make them reflect on what went wrong. Yes it’s awkward, but it’s necessary for both your and their businesses to grow.
If you liked this info, make sure to follow @koloraddikt on Instagram where we post information that will definitely help your business with pricing and more like this post and this. You can also shoot us a DM if you have extra questions! Now go make your money.