How to know it’s time to raise your prices as a creative entrepreneur
Pricing your product or service is an extremely important piece of your business. Price too low and you’re cutting into profit or people could perceive your offer as lower quality. Price too high and you may be too expensive for your target market. And forget about then trying to figure out when the right time is to actually increase your prices…
Most of my clients priced themselves a little low when they were first starting out so they could get their foot in the door and make some money.
While I don’t necessarily think starting off at a lower price point is a bad thing, you need to have a strategy and understanding on how/when to increase your prices. Because if you don’t, you’re
Leaving money on the table as you grow your skills and expertise
Working more hours in order to grow and scale your business
Raising your prices allows you to grow your business without adding a ton of additional work. It also allows you to bring on help if you need it while keeping your profit margin and cash flow where it should be.
But you’re here wondering how to know it’s time to raise your prices… so you probably know all of this already…. So how do you know when it's time?
For me, intuition plays a big role. I can often intuitively tell when it’s time to reevaluate my pricing structure for each of my offerings but I alway pair that with actual research and data so I can make the best decision possible.
Here are some factors to consider when deciding whether or not to increase your prices:
Are you consistently selling your offer with relative ease at your current price point?
This could mean a lot of things but all of them point to it's likely time to increase them.
If you're selling with ease, it could mean a few things:
Your prices are too low
You've nailed your sales pitch and messaging
Your audience sees the value you offer
Selling with ease means you just have to implement a few tweaks to your messaging (if any at all!) to elevate your messaging around your offer so you can command that higher price point with ease as well.
Do you regularly get objections about your pricing from your target market?
If the people objecting to your prices are actually in your target market, this could mean that your pricing is too high at the moment and I wouldn't increase them just yet.
Instead I'd work on repositioning your offer and reworking your messaging to highlight the value it provides (without lowering your price!)
Then once you start selling with ease, you can work on a plan to increase your price.
Are you providing way more value in your offer than you're being paid for?
Chances are that your offer has evolved as you've worked with more and more clients meaning you likely offer more value now than when you first started out and your pricing should reflect that!
This value could be in the systems you've implemented, your client experience, or the deliverables you provide. Look at the entire offer and experience from A-to-Z to determine its true value.
You'll want to adjust your messaging to make sure you communicate this additional value when increasing your prices.
Have you had potential clients comment about how your prices are lower than others?
This doesn't happen that often but it definitely happens! If these potential clients actually hire you, then you know that they understand the value you bring to the table.
If they don't hire you, it could be a problem with your messaging or that they perceive they'll receive less value at your price point.
Consider how these conversations have gone so you can pinpoint what's actually going on but increasing your prices could be the right move.
Is your intuition giving you a little nudge that you want to increase your prices?
This one isn't grounded in strategy other than that your gut knows what's up and I think following our intuition in business is highly underrated. If you have a nudge to increase your prices, there's a reason why. You've likely subconsciously picked up on the indicators from above or some other factors so follow that nudge!
Are there external factors happening in the industry or economy you need to consider?
Right now, inflation is out of control and that means everything you buy and your bills all cost more. If you’re not raising your rates to keep up with external factors like this, your money is not going to go nearly as far. It’s a bummer to have to think this way but you need to be able to take care of yourself first or your business is going to suffer.
To alleviate any anxiety around simply increasing your rates, you may want to consider if there’s a way to repackage and/or reposition your offerings to increase the perceived value of it.
Not to sound like a broken record here, but the most important thing to remember if/when you decide to increase your prices is to make sure your messaging around your offer and the way you position your offer reflects the true value of it. That will help you more easily sell the price increase and the offer in the long run.
Need help figuring out how much to raise your rates by?
The growth calculator in the Straightforward AF Pricing Calculator will give you some great insight (and actually tell you what your an hourly and project rates should be!)
