So, you’re thinking about raising your prices in your small service-based business?
That’s a smart move, but let’s talk about how to do it successfully.
First off, raising prices isn’t just about increasing your rates; it’s about doing it strategically. You see, there’s a difference between raising prices and raising them successfully.
Before you even think about bumping up your prices, you need to have a solid demand for your services. If you’re struggling to get bookings at your current rates, it might not be the right time to raise your prices. You should aim to secure at least 50% of your current leads before considering an increase.
1. SMALL INCREMENTS
Let’s delve deeper into the strategy of raising your prices incrementally. This approach is a key to long-term success, and it’s quite different from making one significant price jump annually.
Based on our extensive experience working with various businesses, I recommend a gradual approach. Instead of making substantial price increases all at once, consider raising your rates incrementally, typically by a few hundred dollars. Here’s the breakdown: for every 3 to 5 packages you sell at the new rate, consider another price increase.
Why this method, you might wonder? Well, it’s all about making the transition smoother for your current customer base. Incremental increases of a few hundred dollars are more palatable to your existing clients compared to a sudden leap of a thousand dollars or more. This gradual adjustment allows your loyal customers to adjust to the changes without experiencing sticker shock.
Over time, as you continue with these incremental price adjustments, you’ll find that your market can adapt more seamlessly. It’s a strategic approach that ensures both you and your clients are comfortable with the evolving pricing structure, ultimately leading to a more sustainable and profitable business model.
2. CHARM PRICING
Before we delve into the fascinating world of price psychology, I want to share some insights that have been rigorously researched and proven to work effectively.
You may have heard of something called “charm pricing.” It’s a clever pricing strategy that involves setting prices that end with the number nine. The reason behind this lies in a cognitive bias known as the “left-digit bias.” This bias makes consumers disproportionately focus on the left-most digit of a product’s price when evaluating it.
Research has consistently shown that using prices like “$599” instead of rounding up to the nearest hundred, like “$600,” can significantly boost sales. It’s intriguing how the human mind subconsciously perceives “$599” as closer to “$500” than “$600,” even though it might seem unreasonable.
In fact, there’s a study mentioned in the book “Priceless” that found charm prices to outsell rounded prices by a remarkable 24%.
Just imagine the satisfaction of increasing your sales by nearly a quarter simply by making a minor tweak to your pricing structure!
3. PERCEIVED VALUE
While it’s tempting to keep increasing your prices without altering what your packages offer, that approach isn’t grounded in reality. People these days are keen to know what they’re investing in, especially if it’s above the norm.
So, how do you go about delivering more value?
Let’s start with a simple but crucial step – strategically showcasing the value you provide when presenting your offers on your website.
Consider this: even seemingly small things like offering a consultation or a follow-up, which may not have a direct monetary cost, involve an exchange of your time. And as we all know, time is indeed money.
For example; take a close look at your entire client experience. Compare what you actually offer and all its components with what you communicate on your website. I can almost guarantee that you’re providing more than what you’re highlighting in your package details. So, make sure to emphasize those valuable extras. It’s a small adjustment that can make a big difference in how potential clients perceive your offerings. 😉
4. EVERYTHING MUST ELEVATE
There’s a fundamental truth to keep in mind – as your prices go up, everything else should rise along with them. You can only rely on a mediocre website and lackluster brand photos for so long before it starts to reflect poorly on your business, especially when your prices no longer match the value you’re offering.
Think about it this way: why would someone be willing to invest in your services when it doesn’t appear that you’ve invested in your own brand?
The level of investment you expect from your clients should align with the investment you’ve made in yourself and your business. Here’s a concise checklist to ensure that all aspects of your business are on par with your increasing prices:
Remember, investing in these elements not only elevates your brand but also enhances the perceived value of your services, making it easier for clients to justify the higher prices.
5. CREATING CLIENT DEMAND
As mentioned earlier, the link between client demand and increasing your prices is undeniable. However, achieving that increased demand requires effective marketing – a topic that could easily fill its own blog. But for now, let’s touch on some key marketing strategies that tie into this discussion.
First and foremost, it’s crucial to be where your clients are. Not all social platforms may be the right fit for your business, and that’s perfectly okay. While many in the design world are building their businesses through Instagram, my own journey found success on Facebook and within Facebook groups. This underscores a vital point – there’s no one-size-fits-all approach to marketing. What works for one person might not work for another, and dancing on TikTok won’t necessarily be the golden ticket for everyone.
That said, it’s essential to emphasize that marketing your business is non-negotiable; it’s the lifeblood of your enterprise. Neglecting it could potentially cost you your business.
Here are some ways to effectively market your business on social media:
At Bella Maven, we’re all about being the biggest cheerleaders for small business owners. We thrive on encouraging others, and that energy flows back to us through social media shoutouts and support.
In essence, it’s like a trifecta of positive energy that keeps the vibes flowing. And who wouldn’t want that?
So, don’t wait any longer – elevate your business, enhance your brand, optimize your website, and refine your copywriting. You’ll be amazed at how effortlessly elevating your prices becomes a natural progression from these foundational steps. 🚀✨