3 Reasons You Need To Raise Your Rates

When you first started your business, it was most likely because you wanted to help more people. But most small business owners end up buying themselves a job. Businesses don’t fail because someone loses passion over what they’re doing. The business closes because of money problems.

Money problems can be resolved many different ways, but when we first start working with clients at Perfect Day Business Mentorship, most of our clients are undercharging for the value they provide. The owners most likely do what we all did when we first opened: Look at what other similar businesses within your town are doing, and undercut their prices. This is just a recipe to failure.

The critical missing piece? Those undercut prices are beneath already failing price points. It’s a race to the bottom at this point.

Instead, here’s 3 reasons why it’s important to understand the value you provide to your customers, and why you need to raise your rates immediately.

Cost = Perceived Value

It’s important to price your package based around the value you are providing. You have the experience, you’ve invested the time to perfect your craft, and you know you can solve your customer’s problems. Your expertise is worth the investment. The higher you price your service, the more perceived value the customer will have behind the sale. If they pay for an expensive program, they are confident that they are going to get the solutions they are seeking. These types of customers are more likely to be highly invested, and more enjoyable to work with.

On the contrary, if you price yourself lower than similar services, you become a comparable commodity. You are value-stacked against your competitors, and the customer that seeks you out will be a low-invested, short-term customer.

Set Your Business Ahead

Along with perceived value, will be the actual value that you will add behind your service. Because you care about solving your customer’s problems, you are most likely going to take all the proactive steps you can possibly take to help get the client the desired outcome.

This might look like tracking certain metrics for them, or adding elements of “surprise and delight” to their experience and interactions with your business over a certain timeframe.

This will automatically set you ahead of the rest of the pack. Your service is now in a higher tier than comparable offerings, simply because you added elements to your offer that your competitors weren’t.

Better Customer Outcomes

Whatever type of service business you run, the desired outcome that your customer will reach will happen more frequently, faster, and with greater impact. Thus, your customer satisfaction will be higher.

The higher your customer satisfaction is, the more they are enjoying their experience working with your business, the more likely they are to refer their friends and family. You gain a large piece of access to their network by delivering on your offer, which will set your business up for success moving forward.

Ultimately, by charging more for your services, you set your customers up for a better experience with your business, build a high retention rate amongst your clients, and provide you the means to pay yourself more.

If your business is generating the income it needs to in order to provide for you and your family, that means that’s one more business saved.

Raising your rates can be a tough and tricky situation. If you’re not sure how to navigate this terrain on your own, or if you want to do it in the most efficient and proven way possible, work with our experienced business mentors.

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