This past week I got into quite a few discussions about pricing. Pricing is complicated. And even hard, because there are so many elements that go into pricing. Perhaps the most important of which is confidence.
Don’t believe me? Has anybody ever told you – “you don’t charge enough – you’re practically giving away your service!” That sentence probably made you feel bad, but didn’t do much towards helping you raise your prices.
It doesn’t have to be that way.
In this post I share the way I recently raised my prices. I hope you find it helpful.
When it comes to business and even life, I tend to lean to be more conservative – I try not to make drastic changes. I prefer to be well thought out. Sure I try new things, but I always try to take it slow and easy and write everything down so that I can monitor what I’m doing and the effects. The same goes for pricing.
What does that mean?
I’m a copywriter. In my world, monitoring my pricing means that I’m aware of:
i.How long projects take (on average)
ii. What my added value is
iii. How many ongoing clients I have and what my average income from those clients are
1. Be confident in your current pricing
Before you run out and raise your prices you have to be fully confident in your current pricing. The reason: if you’re not confident in your current pricing, it’s going to be really hard for you to raise prices and believe in them. And if you don’t believe in your pricing, none of your clients will either.
One way to help yourself gain pricing confidence is by finding more clients and doing more work for the prices you are currently charging. Don’t think of raising prices until you are so confident with your prices that you feel that you must raise them.
In order to be fully confident about my own prices, I made sure I understood why I was charging what I was charging. For me that meant understanding how long every copywriting project takes.
To do that, I created a time vs. pay spreadsheet on Excel that looks something like this:
2. Know thy value
Do you have repeat customers? Why do they come back? Why do they insist of doing business with you? Have no idea? Well it’s time to ask them.
You’re going to need some courage for this, but you need courage to raise your prices, so this is good practice. Start with your favorite client, the one who raves about your work and that you love to hear from. Ask her why she loves working with you. Write what she says down. What she tells you is worth gold. Repeat with your next favorite customer and so forth.
Once you understand your value – why customers love working with you, you’ll have a better understanding of why they’re paying you what they are and it will be easier to raise your prices, because you’ll be able to backup your decision to any new clients who ask “why so expensive?”
I did this. And when I first picked up the phone it felt awkward. I truly wasn’t expecting client after client to be genuinely happy to speak to me and let me know why they enjoy working with me. But they did. And I even heard some really unexpected things like “I really love getting your hand-written cards,” which you may not think has anything to do with your value, but actually it does.
3. Start with new clients, end with regulars
Know how much you’re earning from your regular, ongoing, bread-and-butter clients. Knowing that you can count on an almost fixed income will give you the confidence to raise your prices with new clients.
Present your newly raised prices to prospective clients. At this point, you’ll already have more confidence to do so because:
- You understand your value
- You feel financially secure because of your bread-and-butter clients
- You understand that losing a client is better than being underpaid – and that the time spent not doing the project you lost can be spent finding clients who will happily pay your fees
When you feel confident with your new pricing, it’s time to take it back to your regulars. And by this point, you’ll want to. Being frustrated with low pay takes the fun out of work. You don’t want this and neither do your clients – especially not your ongoing ones. Pick up the phone. Call them. Be honest. Tell them that demand for your services has gone up and as result so have your prices.
When I did this recently, I was delightfully surprised to find that my ongoing clients were so happy for me that I was succeeding and more than happy to pay my new fees.
So get to it. If you think you’re undercharging, you probably are. It’s time to do something about it.