How To Raise Your Prices

Old School BatmanYear end is a great time to consider the year to come.  Review the wins and losses and vow to make 2014 even better.  Update your Budget.  Consider what costs are going up. Health insurance?  Yep.  Retirement benefits?  You aren’t getting any younger.  New trucks?  Hey, it’s time.   Then, create a top line Sales Goal that will cover your guesstimated costs and deliver your desired amount of profits.  Business 101.  

Now, consider what that will do to your Selling Prices.  Or, put another way, consider what you will have to sell each hour or widget for to hit that Sales Goal.  Time to raise prices?  Yep.  Prices go up…year after year.   The truck you just bought is more expensive than the last truck you bought.  (It’s expensive to be a Superhero, like Batman!  Just see the infographic below from geeksofdoom.com. The cost of Wayne Manor and the Bat Cave keep rising. :) )  With few exceptions – cool electronic devices! – most products and services are more expensive now than they were then.

Batman Infographic

When you raise your prices, consider what it will take to get your customers to come along.

Raise your standards.

Once upon a time, as The Plumber’s Wife, I raised our prices by 500%.  We went from $30 per hour to $150 per hour.  This was back in 1992 when the going rate in my neighborhood was $30-50 per hour.  What did I do to communicate that we were different and better and worth it?  We bought nice, clean, sharp shirts for our service technicians.  That meant you could no longer wear the, “Kill them all, let God sort them out,” T-shirt to work at our Plumbing company.  Bit by bit, we raised our standards.  I promise that if you show up clean, sober, on-time, dressed right and use a checklist, you can quintuple your prices and some people will pay more for that.  So….

Pick the right customers.

Who do you want as your customer?  Well, you don’t want someone obsessed with low prices.  You are not going to be of service to the do-it-yourselfer who could actually do it himself.  You don’t want people who really don’t plan on paying you.

You definitely want my mom.  For Mom, low price is no reason to buy.  She doesn’t trust Sales.  Here is her philosophy about Sales:

“They run Sales to get rid of things.  If nobody else wants it, why should I want it?” 

I went shopping with her the other day.  Scanning the shelves, she spotted a bottle of Clorox cleanser, an item on her list.  Two bottles of the cleanser were side by side.  They were virtually identical, except one of them had a sticker that said “20% OFF.”  She picked up the bottle without the sticker and put it in her cart.  When, I asked her why she didn’t go for the discounted one, she said,

“There must be something wrong with it.”

And, she certainly doesn’t want to do it herself.  You could give Mom a brand-new, top-of-the-line water heater.  You could give her detailed instructions for its installation.  You could make it simple by shrink-wrapping all the needed bolts and tools.  You could even pay her $500.  But there is no way on earth she is ever going to install that water heater herself.  She’s going to call a professional.  She’ll call a nice, neat, uniformed individual from a local company with a good reputation.   She’ll pay that person a princely sum so that she doesn’t have to do it herself.  See what I mean?

So give my mom a call.  Or find some of her friends, and go work for them.

And, it’s not just my mom who will appreciate you.  Start with your favorite and best customers.  Call them up and tell them what you love about working for them.  Then, ask, “Why do you like to work with me?”  Get their testimonial and picture and highlight them in your Marketing campaigns.  Get dozens of great reviews on Yelp and Angie’s List.  Ask great customers  to spread the word to their friends on Facebook.

Raise your prices.  Raise your standards.  Find the right customers.  Read more in my super popular book, How Much Should I Charge?

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Ellen Rohr, The Plumber's Wife Turned Business Makeover Expert teaches business basics. Ellen specializes in helping business owners put simple business plans together. She teaches them how to make more money and how to stay focused and profitable. Ellen makes ordinarily dry-as-dust business planning powerful, easy and fun. You can find Ellen on Facebook, Google+, or visit the contact us page.

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About Ellen Rohr

Ellen Rohr, The Plumber's Wife Turned Business Makeover Expert teaches business basics. Ellen specializes in helping business owners put simple business plans together. She teaches them how to make more money and how to stay focused and profitable. Ellen makes ordinarily dry-as-dust business planning powerful, easy and fun. You can find Ellen on Facebook, Google+, or visit the contact us page.
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4 Responses to How To Raise Your Prices

  1. John says:

    Broad subject. Enjoyed read…

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