Raise Your Prices!
Ep14
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Why Raise Prices
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[00:00:00]
Welcome back to the podcast. I am glad to have you with me today. Last episode, we talked about setting your initial prices. That starting point that I've got to put something on paper and I have no idea where to begin, but today I want to talk about raising your prices. 'cause ultimately that's where this should be going, and so many people.
Are afraid of raising their prices. They really probably should, but they're afraid of missing out. So today I'm gonna tell you exactly how you can approach raising the prices in your business so that you get the most possible out of your [00:01:00] side hustle. We want to make sure we're being profitable, not just busy.
Busy is not the goal. Busy is not what we're after. Every time you sit down to work on your business, you're sacrificing something. It might be sleep, might be your lunch breaks, it might be rest. It might be some extra time with the family.
So we've gotta make it mean something. If you've intentionally set aside this time to work on the business, if it's part of what you've carved out, we've gotta make it mean something.
Measure Conversion Rate
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So what we're gonna do today is how we measure exactly where we're at, and then raise our rates. So the, the disappointing part is if you don't know what your conversion rate is, then you don't know whether or not you can raise your rates.
It's not all that complicated. I'm gonna give you the simplest approach to it possible, but it's important to measure something so that you're able to [00:02:00] make these decisions based on information you've actually got. You're not just winging it. So what we want to look at is how many offers, prices, proposals you send out.
So if somebody expresses an interest in working with you, maybe you reach out to them. Maybe they reach out to you regardless of what it is. If you get to the point where you make them an offer, you say, this is what I have, would you like it? Product, service, whatever it is, the question is a yes or no. Now, you may find out that you get a lot of maybes, and that's a problem.
But what you need to look at is in a given month. How many offers do you give out? How many proposals do you give out? Say, this is what I'm doing. It costs this, and then how many people say yes? You really don't even have to know how many people say no. You can just get how many people say yes, and then you take the [00:03:00] number who say yes, divide it by the number of offers you make, and boom, there's your conversion rate.
If you give out 10 offers. Two people say yes, it's 20% conversion rate. If you give out 10 offers and F five people say yes, it's a 50% conversion rate. So now we know where we're at. So with that in mind. The first step that you have to do is sit down and look at the emails you're sending out, the contacts you're making.
You have to track this. We've talked about CRMs and tracking a pipeline, tracking information, making a simple spreadsheet, and then one day migrating to tools. But you have something to track this. So now we just need to say, this month I sent out this many. Offers, pitches, proposals, invited this many people, this many people purchased.
A lot of times it'll be a little different with a product because you're selling it maybe on a website, [00:04:00] so people are walking by and maybe they purchase or they don't purchase it, and then they. They go about their business. So there's a little bit of difference there. So this is really for those high ticket things that you're offering a service an expensive product, maybe a digital product, and you actually make a one-to-one invitation.
Healthy Benchmarks
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So the metric that I like to see, and a business like this, is you want between 30 and 50% of people saying yes. That's a reasonable target. If you're in that range, if you go look at the math and that's how many people are saying yes, then you've got a pretty good offer. Maybe you can improve that. I would say that there's always opportunities to improve because if you improve your offer or your messaging or the quality of your service, your positioning, maybe you get more reviews.
So it's easier to convince somebody. We would expect this. Conversion rate to start creeping up over time as you [00:05:00] grow as a business. So where you are right now should slowly tick up is the ideal situation. But if you see yourself in that position, your pricing is good for right now and you don't have to touch it again, but you have to measure it and you have to keep measuring it so that you know when it is time to raise your rate.
When Yes Is Too Easy
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Now, if you are above 50%. That's the too easy zone, right? It's the offer is so good and the price is so low that almost everyone is saying yes. You're just such a cheap solution that everybody is seeing the benefit and you are leaving potential money on the table. In that situation, that's a difficult position to be in.
So if you find that out and you go, okay, I'm above 50%, let's do the math on it. Let's say you were at 80%, you send out 10 offers. Eight people say yes, 80% conversion rate [00:06:00] too high for argument's sake. Let's say the price was a hundred dollars for whatever it is you're offering. So you sent out. 10 offers a hundred bucks a piece.
Eight people say yes, 800 bucks. Hey, $800 in a month for your services. Not a bad little chunk of change. That's not bad. You're doing the work for the eight people. You might be happy with that. However, what if you doubled your price, but the conversion rate dropped to 40% into that healthy zone. $200, same 10 offers, same.
10, 10 people. But now you only get four people saying, yes, you still made $800 and you only had half as much work to do, half as much product to ship. It's the same income, less work, less, [00:07:00] less time having to be spent on the business now. Over time, we actually want to grow probably, so maybe we want to target a 50% or 60%.
You know, there's, there's other things that go into it because we want the business to grow. But I think it's a really good illustration that sometimes just raising the rates and taking fewer clients on is actually still really healthy. It's not necessarily something to be concerned about because you can still make that income.
What actually ends up happening when you drop that conversion rate is now instead of your offer being so good that it's stupid for anybody to say no. Now some people have to go, is that worth it to me? Because the people who say yes still see the value and say, that is still worth it. I am going to say yes.
It was always gonna be worth it. Whether the price was a hundred dollars or $200, it's still worth it to them. So they're still going to hire you, they're still gonna work with you. [00:08:00] However, now there's just more people who go, you know, I, I think it's a, it's a good thing that you're doing. I could see the benefit, but it is not worth that to me.
And the thing we have to remember is we don't take that on ourselves. When somebody says no, it's not an indictment of you. When somebody says no, when somebody says they're not going to work with you, they're not saying this isn't valuable.
They're not saying, you do not have a good product. They're not saying, you are not even worth it. They're saying that for them. This is not worth it. That's all. And we don't want to be pricing ourselves down so that everyone says yes, because we're making ourselves busy, busier, and busier and busier. We're not making any more money.
We have to make this something that's sustainable. Otherwise it's just gonna feel like another job, and that is the last thing that we want to do. So be willing. For more people to say no. 'cause you [00:09:00] can still grow, you can still improve, and in front of the right people, it's still going to be valuable.
So that's important.
Test Higher Rates
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Okay, so that's above 50%. If you see that, start looking to raise your rates. Do it for a couple of months at a time. So if you were seeing a high conversion rate, raise them 20%, 50. Throw a number out there and start to see, you know, test it over a month or two. Depends on the number of offers you are regularly making.
How many leads are coming into the business, how many end up becoming an offer for working with you? So you don't necessarily want to. You know, do this super quick unless you have enough information. So a couple of months to, maybe three months depending on that, just to see how that affects the conversion rate.
Maybe you narrow it in, you drop it back a different direction, so, so make sure we're doing that.
Fix Low Conversions
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Now, if you're conversion rate [00:10:00] is below 30% right now. Maybe the, maybe you've raised your rate some maybe you just did the starting pricing because you're beginning your business from last week and your conversion rates are lower.
It might be the price. So look around. Is there anybody else offering a similar service? Get an idea of what they are offering, but really it's likely something else.
Bryan Steele: Don't just assume you're too expensive and start slashing your prices.
You're racing to the bottom. At that point, you need to look at the business and understand, well, why are so many people saying no? If you get the opportunity. You can ask that to people that say no, say hey. Totally accept that, that's totally fine. I'm, I'm just curious because I'm always wanting to improve my business.
Would you mind sharing with me why you've decided to say no and do not, again, do not drop the price. Just use that as an [00:11:00] opportunity to learn. Use that as an opportunity to say, maybe I'm missing out on something here in my business. Maybe you're not making it clear why you're better than your competition.
This would be called a USP or a Unique Selling Proposition. What is it that sets you apart from everybody else?
Do you apply a special treatment at the end of your service that's helps things be higher quality? Are you always on time thinking about what it is that's unique that stands out? Becomes really valuable because then that positions you in the customer's mind at a higher level than somebody else who's lower price.
And then somebody who sees that value is willing to pay more money because of that unique selling proposition, because of the way in which you stand out. So if you're not. Above 30%. Look at that. What is your offer? [00:12:00] How are you conveying that? Is your pitch really concise and clear in who you're for and how you're helping and the benefit that you provide?
You may need to improve your speaking skills. There may be something in there in your sales process. You just have to improve. It may be a skillset on selling that needs to happen.
You also might find out. That you're not targeting the right people. So take a look at the people you're making offers to the people that say Yes. Are they different in some way? What makes them different? What makes it easier for them to say yes versus the people who say no? Look at those people. Look at your ideal client.
We've talked about that. Does that need to change and adjust Is your messaging speaking to that ideal client specifically so they know, hey, you are the person for them. You have a solution for them. Be looking at that, thinking about your ideal clients, your unique selling proposition, and if [00:13:00] all those things feel consistent and focused and good, and maybe you're just a little high on the pricing, take small increments down.
So when I mentioned jumping up, maybe you jump up by. 20, 30, 50% in your price to just see what it does to the conversion rate and measure it when you're going the other direction. We just need to be really careful that we don't cut it too far. So instead of big jumps, go five, 10, 20%. Make it a little bit smaller so that you're not gonna feel that in a super painful way.
'cause odds are, if your conversion rate is below 30%. You're just not that busy right now. You've got space to take on more clients, so we need to just be intentional about where you're at, where you're showing up. Maybe it's honestly not enough. People know you exist, and so you've got to be more active in your marketing on social media, showing up at networking events, telling people about your product.
Maybe you need to run Google ads, [00:14:00] whatever it might be. You just need to get in front of more people. 'Cause you've got a limited network and all of the easy yes clients that you know of you've already gone through. So you need to get in front of new people. Those are some things to, to think about, but make sure we're not just slashing prices for slashing prices sake.
That's not necessarily going to help. And so we want to be very intentional with that.
Imposter Syndrome Proof
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Now I know. Going back to raising your rates, you might feel like it's a big risky thing. You might go, ah, if everybody's. Gonna start saying no. If I'm gonna get more nos, my business is gonna be suffering. Well, we did the math earlier, and it doesn't necessarily mean that, right?
You may be doing the same financially with less work, which is not necessarily a bad thing. Depends on your goals and what you're trying to achieve with the business. But we want to make this something sustainable. But if you're feeling that. If you start to feel the imposter [00:15:00] syndrome, like, oh my gosh, I've only been doing this for six months and I'm already gonna raise my prices, you know, I'm doing good.
Like, why would I do that? Everybody's gonna start saying, no. You're going into that imposter syndrome that we talked about in a previous episode. You're starting to tell yourself, I'm not worth this. You should not. You should not raise your rates. Your service isn't worth that. It is not up to you to determine the value.
The customer will tell you the value of what you do over time. So it feels risky. And when it feels risky to send, like every time I hit send on a quote, I still get a lump in my throat. I'm like, oh my gosh, are they really gonna spend that much money with me? Are they really gonna say yes to this? And it feels little anxiety inducing.
Completely honest. It just feels that way no matter how good it is that you do it, and how long you've been doing it. Lots of times when you make that. That pitch it, it's just gonna [00:16:00] feel like they're, they're just gonna say no. ' There's no way they would say yes to me at this.
They're, they're just gonna say no. When you start to feel that you have to go back to your evidence folder, you have to go back to the receipts that you've been keeping. These are the testimonials, these are the reviews. These are the people that have shared what you have done and how much they are happy to have worked with you.
If those receipts will give you the courage and the confidence to say, okay, I'm gonna give it a shot. It may not be right. You may have gone too far and you need to back off, but that's okay. We are learning in this process and nothing is permanent. It is totally fine to raise your rates. Do not worry about it.
Go take that step. Be courageous. Use your receipts and hit send.
Final Challenge
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Thanks so much for joining me today. That's my task for you. Look at your conversion rate, and if it is too high, [00:17:00] start raising it. On the next quote. On the next proposal, raise the price. 10%, 20%. Just do it and don't wait. Do it today.
Thanks so much for joining me. I will see you next time.
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