Are you tired of feeling like you’re not making enough money?
Are you working hard but just not getting ahead?
And who heard of an owner getting a raise anyway?
If that’s the case, it makes sense to give yourself a raise and start raising prices! Now’s the time.
Many of the small business owners I work with are scared to death of raising their prices. When I convince them to finally take the plunge, ALL, let me repeat that ALL of them say the same thing after: “I should’ve done that years ago; nobody said anything.”
If you have a good product or service and you price it accordingly, you will find that most customers are happy to pay the asking price. Always remember that you can buy a suit at Walmart or a suit at Tom Ford. A Kia or a Ferrari. There’s a buyer for each end and everywhere in between.
You did NOT build your business to save people money.
It’s vital to price your products and services in a way that allows you to make a profit – the goal of your business is to support your lifestyle. You’ll make more profit by raising your prices, so give yourself a raise!
You work hard, especially if you own a restaurant, and you deserve compensation for your efforts.
Live By Price, Die By Price
When competing on price, there are a few key disadvantages that businesses need to be aware of.
First, when you compete solely on price, you put all your eggs in one basket. If you cannot undercut your competitors, you’ll lose out on business. Price shoppers are fickle, and it will be easy for someone to undercut you, luring customers away because they are only loyal to the price, not to you.
Second, you’re devaluing your product or service by competing on price. When customers can get the same product or service for a lower price elsewhere, they’re less likely to see the value in your offer.
Third, by competing on price, you’re making it difficult (if not impossible) to make a profit. You may be able to win business in the short term by undercutting your competitors, but you’ll quickly find yourself in a losing position if you don’t raise your prices eventually.
Why You Must Raise Your Prices
If you don’t raise your prices regularly, you will eventually be at a disadvantage compared to your competition. When your competitors raise their prices, you must do the same to stay competitive. However, if you haven’t been raising your prices regularly, this can be a difficult and uncomfortable process. It’s important to remember that raising your prices is not bad; it simply means that your products and services are worth more than they were before.
There are several ways to overcome the fear of raising prices. The most important thing is to have a good reason for doing it. Here are a few reasons why you might want to raise your prices:
- To cover increased costs.
- To stay ahead of the competition.
- To increase profits.
- To offer better value to customers.
- Hire better staff, so you can take time off.
Give yourself a raise!
Cost increases are inevitable – especially with supply chain issues and product shortages, prices have increased. Those have to be absorbed into your pricing.
A quick search of prices in the 1950s:
- The average hourly rate for auto collision repair was $4 to $5 per hour.
- The average hourly wage for a body man was $1.75 per hour.
- Sunday dinner at the Covered Wagon, Chicago: Prime Rib U.S. Choice Beef, $2.75 served with Relish Tray, Baked Potato, Salad, Dessert, Soup, Vegetable, Beverage, Homemade Hot Rolls.
- You could buy a man’s sweater in the Sears catalog for $5.74.
The point is – things change. The economy shifts based on a vast number of concerns. If you can articulate one or more of these reasons to your customers, they will be more likely to understand and accept the increase. You may also consider offering a discount for early payment or larger orders. This will help soften the blow for customers who are reluctant to pay more.
If you want to grow your business and maximize profits, it’s something that you’ll regularly have to do.
Compete On Value & Experience Given, Not Price Charged
To survive in business, you need to offer more value than your competitors. You need to be the “better than…” option in your market to have longevity and growth.
Charging a lower price doesn’t support your goal. Most buyers don’t make decisions solely based on price; premium prices will give you premium clientele. Don’t be emotional about money or your business; make decisions based on math.
When it comes to pricing, many business owners make the mistake of competing on price. This is a dangerous game to play because it’s very easy for competitors to undercut your prices and steal your customers. A much better strategy is to compete on value. This means offering a product or service worth more than the price you are asking for.
There are several reasons why competing on value is a smart strategy:
- It allows you to charge more money without losing customers.
- It helps you stand out from the competition.
- It increases profits.
- It builds customer loyalty.
Your best customers (the vast majority) know your value and are willing to pay for it. Make sure you know who they are and use the information you collect about them to find more new customers just like them. Targeting others like your best customers successfully can be done through Facebook Ad Manager.
If you need help with Facebook Marketing, we do that. Click here to schedule a Demo.
Pricing increases might lose some customers, but you can use that change to find new customers, like your best customers. They appreciate and are willing to pay for the experience.
You will be successful if you can find a way to provide more value than your competitors. Many business owners achieve this by offering superior customer service, higher-quality products, or faster delivery times. Whatever you do, make sure you can back up your higher prices with tangible benefits that your customers will appreciate.
Making a profit is a good thing. Making a profit is essential; it’s why you are in business.
If you’re not making a profit, your business will eventually fail. It’s as simple as that. Many business owners make the mistake of thinking that they can get by without making a profit or they can cut costs in other areas, but this is a dangerous way to think. Your business should always be designed to make a profit; if it’s not, you need to find a way to change that.
Don’t lessen the customer experience to cover costs; raise your prices.
No one expects that you are in business to NOT make money, even your customers. And no one expects your employees to make a high income while you are not.
There are several ways to increase profits, but raising prices is usually the most effective. If you sell products, you can raise prices without losing many customers if you offer good value. You may need to find ways to increase productivity or efficiency to make more money if you’re selling services.
It’s Good To Make A Profit
When you make a profit, it means that everything’s better. It means your business is making more money than you are spending and generating a positive cash flow. A healthy business should always make a profit because this is the only way to ensure its long-term success.
Making a profit is essential for any business, and there are several reasons why:
- It allows you to reinvest money back into your business.
- It helps you cover expenses and debts.
- It provides a cushion in case of tough times.
- It allows you to expand your business.
- It allows you to target new customers who are willing to pay more.
And Remember, Pay Yourself First.
Most of all, you put more money in your pocket. Your personal income can grow, allowing you to enjoy the lifestyle you choose.
Raising your prices allows you to generate a consistent profit, and your business will grow. You’ll be able to reinvest more money back into your company, cover your expenses, and grow your business. And best of all, you’ll be able to do all this while making a healthy return on your investment.
If you’re interested in laser targeting and getting more customers like your BEST customers, click the button below and schedule a demo of our Facebook New Customer Attraction System. It’s in BETA mode right now, and we are looking for a few more test pilots. Schedule a call to see if you qualify.
Known as “The Done For You Marketing Guy for Restaurants.” International Speaker on Restaurant Marketing. Published contributing author of 4 Marketing Books. Industry expert on Google Searches and Review Sites. Recovering Independent Restaurant Owner and Caterer of over 21 years. And, all-around good guy.