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When you start your own business, you face many challenges when you first start out.  What are you going to sell? Who are you going to sell it to? Where and how are you going to sell it? And what are you going to charge?  These are all tough questions to answer when you are first starting out.  But the hardest one, I think, is what are you going to charge.

Setting your prices is no easy task.  The problem is you don't want to set your prices to low and undervalue yourself but you also don't want to overcharge and not get any clients because your prices are too high.  So the challenge is trying to find a price that is between the two.

So here's the thing...before you can determine your prices you have to figure out what your sales need to be in order to just break even.  But before you make a profit you have to know what it takes to simply just run your business.  Breaking even means you're not making a profit but you're not making a loss either.  You are net zero in the game.  All of your revenues equal all of your expenses.

Now once you figure that out, you need to determine how much you need to increase that number by in order to yield the profit that you desire to make.  Remember you got into business to make a profit not a loss.  So if you want to net a 10% profit, you need to increase your sales goal by 10%. Now the trick here is to be confident in whatever price or prices you come up with.  Be sure that the price you came up with is what you feel you are worth.  Ask yourself these questions - Do you have credentials to support these prices? Does the value of the work that you provide support those prices?  Do you have social proof to support these price and the fact that your services are good services?

The third thing you need to do is compare your new price to the prices others are charging in your industry.  Are they comparative, or way out of whack?  And by out of whack I mean way left field.  Completely outrageous.  If so you may need to re-group.  But beware - don't drop your prices to a much lower rate just because Chrissy down the street charges way less.  If your work supports your prices then stick to your guns.  Just make sure your not too far off the mark.  In some industries, a huge difference from the market could potentially kill you business success.

Did you struggle with setting your prices?  What mechanisms did you use to help you get clear on what your pricing should be?

Need help setting your prices?  Contact Sherrell for a business assessment session at info@empower2thrive.com.

Sherrell Martin is the Founder and CEO of Empower 2 Thrive, LLC, a boutique practice offering financial management accounting and business success strategies.  She strives to empower business owners and entrepreneurs to thrive financially in life and business by gaining financial control and creating wealth and legacy.  She helps business owners and entrepreneurs who struggle with business and financial organization establish systems that will allow them to create, build and maintain a financially thriving business using accounting, finance and business strategy. To receive your free copy of her Start-Up Success Guide - The 10 Critical Steps to Building a Thriving Business from the Start and a FREE subscription to her Empowering You bi-weekly e-zine, send your request to info@Empower2Thrive.com.

All rights reserved.  © 2013

How to raise your prices without losing your clients

Eventually in your business you’ve probably considered or are forced to increase your fees or prices. And for many doing so without losing your most valuable clients/customers comes with a level of anxiety and perhaps fear.

Will they go to another competitor?
Will they begin to bad mouth me and tarnish my reputation?
Will they simply laugh at me and threaten to leave if I raise my prices another penny?

However at some point, especially if you offer time based services (charge by the hour), you’ll need to increase your fees, give yourself a raise and expand your business. We all have the same 24 hours a day it’s impossible if you are a solo entrepreneur to grow your biz without hiring new staff, or increasing fees.
So If you’re in that critical space where your palms are sweating, you’re staring at your bank account or an open email to your client where you have to break the news that you must raise your fees - here’s what you need to do and how to go about raising your prices.

1st. EVALUATE YOUR TOP CLIENT LIST. While all your clients/customers are important to you, those that consistently invest in your services are your Top clients. Evaluate the services you clearly offer to your top paying (or frequent paying) clients. What are they buying from you? What questions or issues do they seem to have that you may not be charging them for? What are they saying about your services right now? Often clients will hire you for what they think they need and then realize they need you for more.It’s up to you to be in the position of power to realize exactly what that is. There is hidden (profit) potential in those unspoken needs of your clients.

2nd TURN IT INTO A PACKAGE. Turn what they buy from you that is related to task/time (hourly) into packaged automated services. Ex. when I created Your Simple Bookkeeper, I created it as a monthly automated service to tackle bookkeeping task at a monthly recurring fee. This allowed me to package my “time driven” services and hire other bookkeepers to actually do the work so I could be available to offer higher end consulting services. Automating (or systemizing) your services and business is a common struggle for business owners as many like the control of knowing they did the work, however remember there are only 24 hours a day and you need most of them to work ON your business (more clients, partnerships, exposure) not IN. Your clients will appreciate your keen insight into entrepreneurship.

3rd MAKE IT SIMPLE. Create one sheets of those simple services you’re now automating or have created packages for. One sheets are literally that, a one sided designed document with your service or product description on it. It gives the reader all the information they NEED to know about what you offer to make a decision on hiring you. You can place your new automated time driven services on your website or "work with me" page. Ensure to include a payment link so potential customers can submit a payment (or if you need them to inquire first - a way for them to email you). Automate your hourly based services as much as possible. 

4th. SEND A LETTER. Send your existing clients a letter – written to them as specifically as possible (or call them, invite to coffee, etc) and explain to them that you are seeking to expand and offer more services to them and want to serve them in more ways. Having this personal touch goes along way. Like in #1 - getting to know your clients is important. You are in the position of power - you were hired to provide a solution and often that solution isn't in what you're being paid for, but in those consistent questions you're being asked that you're not charging for. Once you've realized that, and have now increased your fees. Compassionately talk to your clients, get them on board - you'll find that most are eager and ready to have you do more for them.

5th. MAKE IT COMPLIMENTARY. You may offer them the same services they are currently buying from you at a slightly higher fee (your new higher price) but you’ll offer 2 of your task driven services for “free” or “complimentary” Ex. YSB’s bookkeeping services are $75 an hour for most businesses. Our Small Business packages run form $150 a month to $1250 a month. At the $1250 level, bookkeeping becomes “complimentary” as the bulk of the services they are getting become more consultative in nature. 

There are countless other strategies that I’ll share in subsequent blog post about how to do this, but these 5 steps are great starters. The moral of the story is to not become self-victimized by fear of losing clients when it’s time to raise your fees. Do it with confidence, and be clear on WHY you’re doing it. You could lose some clients, but again you probably WILL open yourself to a new group of clients eager to pay your higher fee  .

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Katrina M. Harrell is a Award-Winning Entrepreneur and Business Strategist and 3x Best-selling author. She trains and teaches women entrepreneurs how to create solid 6-figure and above business strategies focused on strategic pricing and marketing. She is co-author of "How She Got Free: A 5-step Spiritual Business Manual for Women Who Lead through Entrepreneurship".