While none of us particularly enjoy it, finances are a part of business - we gotta talk about the numbers. It’s essential to have enough revenue to cover expenses, salaries, and other budgeting tasks that arise throughout the year.
But outside of that, what happens when you’re performing well, and decide you need to make an additional hire? You might not be able to unless you have a little bit more waiting in the bank. So naturally, this is when you start to think about raising your prices and try to talk yourself out of it.
First of all - there’s nothing wrong with raising your prices. Eventually, we all need to consider those small touches necessary for upgrading your business, and adjusting your price is important for affording those upgrades! But sometimes the idea and fear associated with price increases can stop you from doing the deed, and you’ll end up never being in a place to make that hiring choice.
There are a few initial fears that might be stopping you from increasing your prices. You could be worried about losing customers, changing your profit margins too much, or how you’ll be able to produce the quality of work that matches your price tag.
Chances are, it’s been a while since you’ve updated your prices, so it’s time for a pay raise. While listing your prices online is one gamble that you may or may not decide to take, raising your prices is not something to shy away from. At some point, every small business has to increase their rates - here’s why.
Your Business has Increased
Hopefully, over the past few years, you’ve nurtured your once potential leads into a solid customer base. You’ve honed down your products or services and really fine-tuned your business model, so it runs like a well-oiled machine. You’ve found a target market that continues to increase your profits, and you feel confident about your business moving forward.
With all these steps implemented, it shouldn’t be difficult to start seeing an increase in your business every few years. It might not happen all at once, but through customer reviews, social media, and the quality of your product, people are going to want to try it for themselves. That’s when things might start to get too busy, and it might be time to raise your prices.
If you start to see an increase in your business, and can’t keep up with the amount of new leads you’re getting every month, then it’s definitely time to modify your starting price and charge to a higher rate.
Your time is valuable, and in order to reform quality work, changes have to be made. Plus, if you have so much business coming through the door, it might be time to hire a handful of team members that can accommodate the expanding needs of your company.
That’s not to say you change your price point drastically. A higher price doesn’t mean you raise your prices so much that you lose all your existing customers. Just be smart in your pricing strategy. Increasing the price by 10 percent isn’t a steep change.
You have Additional Expenses or Services for your Business
As time goes on, the needs of your customers, and your business, change. Maybe instead of doing everything by hand, or on a dated software system, you’re ready to upgrade to a high tech CRM system. Purchasing a high tech system, and paying to train your employees, takes time and resources that you might not be able to cover with your current rates.
In order to grow your business, and continue evolving within your industry, you have to outsource or invest in resources that will help you achieve those goals. It will help service or product quality change for the better.
If you have to increase costs in order to accommodate those needs, it’s not the end of the world. In fact, you can update your clients with all the new software or services you’re going to provide them with, because of the price bump. This is a way to raise prices without losing customers - they’ll understand where you’re coming from, and be able to see the long term benefits of this decision.
You’ve Had Consistent Rates for Over A Year
As a business owner, there are three things that can really help out your business: an increasing customer base, quality customer service, and reliable rates. However, if you’ve had the same rates for a year or longer, and feel like your quality of work has improved drastically, then it’s time to reconsider your rates.
Everything gets a little more expensive over time - it’s a fact of life. Your CRM software might go up in price, and your employees will be wanting raises eventually. So, it’s time to adjust those rates if they’ve been consistent for longer than a year. A minor adjustment won’t send anyone running for the hills. Ultimately, it will help everyone succeed in the long term, so don’t second guess this decision.
I grew up in the Northern Virginia Area, and spent my days in drama club and riding horses. Somehow, I found my way down south, and graduated from Wofford College with a degree in English and Political Science. Caught between loving the south, and missing home, Winston Salem seems to be the perfect in-between.
My typical day revolves around my love for writing, and I hope to bring my love for learning and creativity to our clients!