One of the first mistakes many small business owners make is not charging enough for their product or service. I know I made that mistake, maybe you did too. But what do you do when you realize what you’ve done? How do you fix it?
The Difficult Conversation of Asking for More Money
So you’ve realized that not all revenue is equal and profit trumps revenue. If you aren’t making enough to cover costs, pay yourself what you want to, or grow in the future then you’ve got a real problem.It can feel like a huge risk to let go of bad revenue even to make room for good, profitable… Click To Tweet
So what do you do?
Fist of all, it’s important to face the reality of the situation. If you simply aren’t charging enough your options are to struggle with unsustainability until debt or exhaustion over take you, or simply fix the problem and raise your prices.
If it’s a choice between accumulating debt and raising your prices, raise your prices.
If it’s a choice between working 80 hours a week and never seeing your family or raising your prices, raise your prices.
If it’s a choice between paying your employees or vendors and raising your prices and paying yourself, raise your prices and pay yourself.You didn't start your business to be broke and exhausted all the time. Click To Tweet
Still, it’s a hard conversation that no one wants to have when it comes time to tell your loyal customers that their prices are increasing. Here are some tips.
Be confidence, clear, and concise.
Something along the lines of, “Listen, I’m glad I’ve been able to offer so much value and such a great price and I’m so grateful that you were one of my first clients. I couldn’t have gotten where I am without you. But I have to tell you that over the past couple years I’ve learned a lot more about my industry, what it takes to run a successful company, and how much value I bring to my clients and I’ve had to raise my prices accordingly. Here’s what that looks like…
I’ll understand if you decide you can’t swing it, but I hope we can work it out and keep working together. What do you think?”
Your situation may be different, but I think you get the idea.
Be okay with any outcome, but don’t assume any outcome.
It’s really a win-win for you. Yes, you’d like to keep the business at the right price, but if they decide to leave you’ve got the time to pursue other work at the right price. Either way your business grows.
Just don’t assume they’re so price sensitive and will absolutely leave and take away their choice by being over defensive or pre-emptively negotiating against yourself. You’re not trying to chase them away, but you’re standing at the door allowing them to decide if they stay.
And this may just be the beginning of the conversation. But you’ve done the hardest part and you can be proud of yourself regardless of the outcome.
While this tip is about the conversation about raising your prices, I did reference an earlier video in which I share how to get paid what you’re worth.
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P.S. If you liked the tips provided in this episode you might also get value from my free report, 3 Steps to Increasing the Value of Your Time.