Want to Make More Money? Fish in a Bigger Pond!

Setting prices is a dilemma most service business owners encounter at one time or another. This week, it was Susan's turn. "When I first started my business, I felt uncomfortable charging for my services. Since I was doing it to make a living, I finally just picked a price I thought wouldn't scare too many people away. Now, based on my available work hours, I can't really take on more clients but at the rate I'm charging them, I'm not going to make enough money to keep the business alive. How do I raise my prices without losing my clients?" she wanted to know.

For whatever reason, it is uncomfortable for many of us to look a person in the face and state our hourly rate or the cost of a project they want us to complete for them. This is usually rooted in our fear of rejection. We think, 'What if the prospect gasps and falls out of his chair convulsing on the floor?' or 'What if he snorts with disdain or launches into uncontrollable laughter?' At the beginning, we really need the work and generally decide we'd rather start getting some clients to build our reputation and skills, thinking we'll charge a rate we know they'll accept. Besides, we can always raise our prices later. Well, now is "later", so it's time to bite the bullet.

First, understand you aren't asking for their firstborn child -- you are asking for money in exchange for the service you are offering. Shakti Gawain, author of "Creating True Prosperity", introduced me to the concept of thinking about money as just another form of energy. Just as you put energy into the service you provide, the client puts energy into their field of interest in order to make money to pay you for your service.

On the business-to-business side of things, the client's business has clearly made the decision to outsource the service they are discussing with you. They have decided to use their internal staff's energy to focus on their core business while outsourcing those things they don't have the skills or time to do. The same is true of individuals - they could paint their house, but they're calling you. Clearly, they don't want to do it and know it's going to cost money to get someone else to do it Either way, they are going to hire someone to do it, so why not you?

That said, it's time to raise your prices. You've got two sets of people to deal with here -- your current clients and your future clients. Future clients are easy - simply start quoting the higher hourly rate or basing your flat rate proposals on the new hourly rate with no mention of a recent price increase. Your fear that you will lose out on some bids WILL come true. You've been fishing in the pond that attracts the lower-end clients, so you will probably have to start marketing to and networking with prospects on the next higher rung. But, so what? It's still your choice ? you can stick with the low-end guys and struggle to make your business profitable or you can start charging a respectable rate for the skills and professionalism you bring to the table to create a prosperous business. It's up to you.

Now, the current clients are the ones you are likely most afraid of. What will they say? Will they never want to work with you again? The best time to raise prices is at the beginning of the year, either calendar or fiscal, or at the beginning of a new contract with an existing client. Never try to negotiate a price increase in the middle of a project. If a project is taking significantly more hours than you quoted for a reason out of your control or it's directly within the client's control, you can consider discussing it with them. However, if you want to be sure to maintain positive client relationships, you may choose to learn your lesson from this one and protect yourself with a contract that outlines contingencies such as that going forward. But, in most cases, never try to increase your hourly rate on a client in the middle of a project. This sends a message that will likely get you the response you most fear - that you are a money-hungry so-and-so who only cares about him or her self.

Instead, wait until a natural beginning, ending, or transition period to communicate your price increase. One way to do it is to send your client a beginning of the year letter that expresses your appreciation of their business in the prior year, outlines any policy changes you've made for the coming year, communicates your price increase, and states your anticipated pleasure of working with them in the coming year. If you are raising prices at the end of one project and are about to bid on another project with the same client, during your discussions tell them you have raised your hourly or project rate and hope they still find it to be competitive and will continue to work with you since you've really enjoyed collaborating with them.

Notice you did not hear me guarantee you will keep every single one of your current clients. Like you, your clients make purchasing decisions based on a variety of factors, each person weighing each of the factors differently. If you've been the lowest price available in your field, you've no doubt attracted clients who make decisions based mainly on price. Increasing your price so you are no longer "the low-price guy", may send them packing. So be it. Once you raise your prices to a respectable rate you can profit from, that's competitive and fair, you will begin to attract clients who will pay it. It's all about positioning. You can position your company as the low-price guy, the top-of-the-line guy, or the value guy (middle of the road price with a quality service).

The lesson here ... it's your business and your revenues are what you make them.

About The Author

Kimberly Stevens is the author of the ebook series, *The Profitable Business Owner: A Step-by-Step System for Starting & Running a Successful Service Business*. Download Sample Chapters & get her free MiniCourse, *The 10 Most Common Mistakes Business Owners Make & How To Avoid Them* at: http://www.askthebizcoach.com/ebooks.htm

kim@askthebizcoach.com

---

Humanize the Sales Process

Q & AQ. Sometimes when I'm presenting to clients, I... Read More

Business Appointment Success or Failure

One of the quickest ways to loose a sale is... Read More

Getting Them to Buy: The Two Most Important Pieces to the Sales Pitch

Why are some sales pitches more persuasive than others? Are... Read More

4 Easy Ways to Boost Your Sales

Here are 4 easy ways you can boost your sales... Read More

Generate Sales with Lead Generation Marketing Tools

One of the best projects to undertake as an online... Read More

How To Stop Chasing Prospects Forever!

Perhaps the biggest challenge faced by salespeople is the problem... Read More

7 Keys to Turning Cold Calls Into Warm Calls

Let's face it when it comes to cold calling many... Read More

The 6 Secrets To Sales Success

There is no magic pill, trick, teqnique, system or secret... Read More

Win More Sales With a 5-Step Sales Process

Facilitating the buying process can be very straightforward and fairly... Read More

Boost Buyer Confidence By Assuming The Sale

I saw something in town the other day that just... Read More

Ideal Clients - Who are They and Where Do You Find Them?

Ideal clients are the ones who are perfect for you.... Read More

Three Secret Keys to Persuasion Magic

Just a few critical distinctions can supercharge your communication skills:1... Read More

Dont Close Your Eyes Or Let Deaf Ears Fall Upon You

To listen to your customer is important, and to hear... Read More

The Golden Week of Selling

Have you ever heard of the Golden Hour? I live... Read More

Visual Science of Selling

Statistics state that 55% of people judgments are made based... Read More

How to Sell a Feeling

To be totally in tune with the needs of your... Read More

How to Spellbind Your Prospects in 10 Seconds!

You've got yourself 10 seconds to HOOK your prospects or... Read More

7 Quick and Easy Ways To Multiply Your Sales

There are always some great, fast and easy ways to... Read More

Hello! I Cant Sell!

What's that you say? You can't sell?Oh, you must be... Read More

Sales Prospects Avoiding You?

This issue's topic on sales prospects comes in response to... Read More

Separating Yourself from the Crowd (Part One of Two)

Warren Buffet says that insurance is a commodity and price... Read More

Leverage Avoidance Values for Irresistible Selling

What are values? Values are filters that everyone uses to... Read More

The Processionary Caterpillar Syndrome Costs You Sales?

Some years ago I read and interesting story that illustrated... Read More

You Dont Need Health Insurance!

Seems almost every situation in our lives is centered on... Read More

5 Powerful Tips To Persuasion!

Having excellent persuasion skills is one of the most important... Read More

Sell Yourself - Sell Anything!

Each of us sells every single day. We are all... Read More

The Quickest Way To Increase Your Sales

The quickest way to increase sales is to make things... Read More

Prospecting: Not A Wild Goose Chase... Its A HUNT

Prospecting for future customers can be fun if you approach... Read More

Sales Performance and Motivation: How to Get Your Edge Back

Performance and motivation are like chocolate & peanut butter; the... Read More

3 Steps To Immediately Increase Sales

Want to increase sales within your company? It's not as... Read More

A Great Sales Technique: Be Aware of Sales Myth #5

A myth can best be described as somebody or something... Read More

Why ALL Sales Decisions Are Based On Emotion - Heres The Proof!

Have you ever gone into a newsagent, picked up a... Read More

Sales Marketing: 10 Explosive Strategies To Amplify Your Sales

Marketing is a skill. Once you master it, you can... Read More