Pricing Fuck Ups. Ep25. Raise your prices 5–10% at a time.

“See how much you can raise your price without losing too many customers.”

You’ll leave less money on the table. Raise your prices, slowly, safe and sound. See how far up you can go.

Don’t disrupt how things work.

However…

If you have shit clients, you’ll keep them. Only now with a few cons.

They’ll:

• Argue the price raise
• Try to squeeze more scope in
• Complain more
• Look at how much time you’re putting in
• Feel scammed
• Fell you’re squeezing them dry (because you’re greedy)
• Look at every tiny, stupid detail to justify why they’re paying more.

Pure joy, isn’t it?

Incremental is slow, marginal and riskier.

Approach

You’re driven by the fear of losing customers.

It might not have to do with your customers, but how you price. May be you’re way underpriced. May be you’re in a very competitive marketplace.

You’re a hostage of your own pricing → Leads to burnout

- I’m full of work and make just enough.

- Double your prices.

- But I’ll lose half my customers!!!

It’s all from your POV. It’s all about you and how the world owes you something.

Odds are, you’re pricing based on what you think is fair and/or marking up your costs.

What does happen

Moving your prices up at 5–10% a time, leads to more busy-ness.

It’s marginal revenue, with not enough effect on your finances.

Erodes the relationship with your customers. If they’re driven by price, they’ll look for (even) cheaper options. All while giving you a bad time.

Do different

Turn things around and think of your customers. Better yet, talk to them.

• Where do they see things?
• Where’s the value for them?
• Are they underserved?
• Are they overserved?
• What are they trying to achieve?

Change how you see things.

Usual (wrong) way: Scope → Cost → Price
Different way: Value → Price → Cost
Answer this: If this (new) price is here, what could we do for it that is worth it?

Double (or radically increase) your price

Now think: Who would this be the right fit for?

Lesson

If you want to rev up your revenue, increasing your prices 5–10% will hurt you more than help you. Take a bold decision. Bold, not stupid nor reckless.

Take your customer’s side and find out how they see things.

Start with what they value.

Read this post and more on my Typeshare Social Blog