15 Jul Time to raise your prices? Start here
Hi, it’s your Money Mavens, and we need to talk about pricing.
Specifically, *your* pricing – and giving yourself permission to charge enough so that you are well compensated for your work. Enough that you can take care of yourself and your family. Enough that you can pay your taxes, buy what you need for today and save what you need for tomorrow.
Yes, yes you can!
“But, I’m nervous about raising my prices. What if clients leave?”
What if they don’t leave you? What if it actually raises your perceived value in their minds?
We get it – the idea of raising prices can be scary, but it doesn’t have to be.
The people who leave because of prices are the ones who see your value as a cost, not an investment.
How did you set your pricing in the first place?
You likely looked at your competitors and played the Comparison Game (not a fun or good game to play, but we all play it).
Maybe they were more experienced than you.
Maybe their online presence was ‘prettier’ with a flashy website, beautifully branded social media, and a clear message that makes you ‘ooh and ahh’.
Or maybe they seemed smarter, more connected, better resourced, or any number of other factors.
So, you priced yourself in comparison, but that can create some big questions and problems.
Where do you feel you fit in that pecking order? Where do you see your actual value compared to their perceived value?
What if it didn’t matter who your competition is or how much experience or expertise they have?
What if you priced yourself based on your growing value compared to who you were and what your experience level was last year?
That changes the conversation.
That’s one of the big money blocks keeping amazing entrepreneurs like yourself from truly reaching your income potential.
It’s probably standing in the way of you setting your prices where you want them.
You grew and learned more as an entrepreneur, as a business leader over the past year, right?
You met new people, made great connections, did great work, and upleveled your expertise, right?
Your pricing needs to reflect your growing value.
And, you don’t have to feel guilty or insecure about charging what you’re worth.
We see this all the time with business owners like yourself.
Pricing is a big question mark, so they start asking friends or checking with their network. “How much should I charge?”
The problem is that these people who love and care for you enough to share their opinions don’t understand your business.
As much as they may like you, they don’t intimately understand your numbers.
They don’t know what you need to charge to do great work and grow your business.
Are they qualified to help you with pricing? No way! You are the only one who knows your business financials, who understands how your business works inside and out.
So, how do you increase your prices?
1. Recalculate Your Pricing Structure
Start with your TPM or Target Profit Margin: how much do you want to make on an hourly or project basis based on your pricing levels minus your overhead costs?
A good place to start is with your costs. Add up all of the costs that go into delivering the product or service, this includes:
- Your time as the business owner. Multiply the number of hours it takes you to create, promote, and deliver the product or service by your hourly rate;
- Your employees’ time. Again, multiply the number of hours it takes them to create, promote, and deliver the product or service by their hourly rate;
- Your cost to purchase the product;
- The cost of marketing the product or service;
- The cost of office space and other expenses that are needed to deliver the product or service.
Those are your total costs to deliver the product or service.
If you want a 40% profit margin – we call that your Target Profit Margin – and the total costs are $4,500, you want to charge $7,500.
If you’re selling more than one unit, divide the $7,500 by the number of units you’re selling.
If the market won’t support this price, you may need to lower your expenses or lower your Target Profit Margin.
2. Know Your Numbers.
Knowing your average heart rate, your cholesterol levels, your blood pressure, and other key details can help you know how healthy your body is.
The same is true for your business.
You need to know your numbers – your cash flow, your Current Profit Margin, your Target Profit Margin, your average monthly revenue, and other key money metrics.
Lead acquisition costs informs advertising spend. Lifetime Customer Value is what will help inform your pricing.
This data can help show you how to reach your Target Profit Margin with the right pricing.
3. Embrace a little discomfort!
How much income do you want to make a year from now?
You need to price to reach that level of profit.
Can this be a little unnerving or scary?
Sure, but don’t let fear dictate your business decisions.
You’re committed to being profitable, to earning your worth, and cultivating your wealth.
Keep taking the daily actions you need to move towards your profits goals.
4. Be ready for more opportunities.
As you charge more to make your true worth, you’ll make a few discoveries.
You’ll find more time, energy, and money to invest in other areas of your life and business.
You can finally be the CEO/Visionary for your business.
You’ll see the highest and best use of your time as the owner is steering the direction of your company, strategically identifying and pursuing the right goals.
More than anything else, we want to remind you: you’re worth charging more!
And if you’re finding money blocks standing in the way, our Money Blueprint Program was made for you.
See how you can break through those money barriers with the Money Blueprint℠ Program. Imagine what earning more can do for your future starting right now!
To your prosperity,
Your HWM Money Mavens