Are you charging enough? Most people are not. Forget what you think the customer will pay and start thinking about the value of the service you provide.
As we all gain in the experience, we can do a better job, and often in a shorter time, and that usually means that your customers are receiving more value from you and you are losing out in profit.
To be blunt, your costs for training yourself, new equipment and better facilities are probably not reflected in yesterday’s prices. So it is time to increase rates.
Will I lose customers? – Probably, but only those that do not see your value.
You should be doubling your prices, but you can always soften this with a pre-announced price increase which will encourage people to sign up for work now before the prices rise. Better still announce the price rise, say double and then give a discount for loyal customers. They will always end up paying more than before but feel they have a good deal.
The new year is a time for renewal, and so that’s why I find it is the best time of the year to do this.
Play a bigger game
I did not want to put this because it has become a cliche and meaningless. If somebody says they are going to play a bigger game, ask them what means. Because too many time it is just self-flattering bullshit.
All we are saying is up to your game to the next level. This may mean you stop hosting 100 seat events and more up to 500 seat events.
However, for many people, going more significant is not the answer. For many, it can be going more in-depth. Instead of a 2-day course, you want to add more detailed content and upgrade to the 3-day course.
Dominate your niche
The best way to win a market is not to be the cheapest. Somebody can always be more competitive. You want to be the most expensive offering with the most value and the most exceptional service.
When you are the most expensive, you have significant advantages
- You can still profit with increased marketing spend
- You can add those nice to have extras without worrying about costs
- You can bring in partners and be able to share the increased margin
- You can run an affiliate scheme and pay them well for leads
80 / 20 rule
If you analyse your customer base, you will probably find that around 20% of your top customers generate about 80% of your revenue.
So, this 20 % are the customers you want to work more with and give more time to them. Put these people, or companies into a unique grouping. Call it a ‘mastermind’ or ‘premium membership’. Give these people the value they deserve. I expect you can think of new things that you felt was not cost-effective before. Now you see them in a new light, anything is possible.
The rest you can treat like a 2nd tier. You still give them value but package it up in a way that leaves you with more time to spend with the higher value group. Automate the simple things.
Price out the trouble makers and time wasters
The great thing about price increases is that those customers that are too much trouble, the ones where you regret taking them on will be the first to complain.
Give them an easy way to leave you. In my hosting business, I will offer to set up their site for them on another hosting platform which they can pay directly and leaves me without any of the day-to-day responsibilities for them.
Often these are the sorts of customers who are going to complain, but if you set them up with a competitor, you need not feel guilty. Be prepared for a vocal endorsement of how great this competitor is, to which you can then take the praise.