Pricing Happiness, part 2: Address Your Fears & Raise Your Prices

pricing happiness part 2: Address Your Fears & Raise Your Prices Effectively, Arianne Foulks, Aeolidia, Illustration Denise Clip art by Denise of Nisse Made via The Ink Nest

We’re talking about pricing! Please see the first part of this series (& the lively discussion in the comments!):

Pricing Happiness, part 1: You Should Charge More

So now that we know the perils of undercharging and the thrills of charging what you’re worth, let’s see how you feel about your current pricing.

bulletHow many hours a week do you have to work to make enough money to live as you’d like? Is it more than you want to be working? If you feel like you’re never caught up, it’s probably time to either earn more and do less work, or delegate some tasks and raise rates to be able to do so.

bulletDo you make about double what you could working for an employer? Remember that if you were employed by a company, you would have insurance, benefits, and taxes taken care of, and you need to manage all of these costs yourself if you’re self-employed.

bulletWhat do your competitors charge? It’s good to do a check on this to be sure that you have an idea of what is generally accepted, but in most types of business, there are different levels of quality and service, and different levels of pricing. Don’t feel you need to match what anyone else charges, but don’t be clueless about what’s usual, either.

bulletWhat kind of feedback do you get from customers about your pricing? Hint: if anyone says you’re not charging enough, take their word for it – your pricing must be shockingly low if people feel they need to speak up (we got this for years)! If you rarely get push-back on your pricing, that’s also a sign that you’re not charging enough. Do people say you charge too much? If so, are you getting plenty of other people who are happy to pay?

bulletDo you have too much demand for your services? If you feel like orders are pouring in and you can’t keep up – ding! – time to raise your pricing.

bulletWhen customers ask you for extras, how do you feel? Can you graciously accommodate them, or do you feel like they’re asking too much of you? If you can’t put extra work into a project for a customer (un-begrudgingly!), you’re not charging enough. You should charge enough that you don’t feel forced to cut corners with your work.

bulletWhen is the last time you raised your rates/pricing? Do you make adjustments regularly, or have you been charging the exact same amount for years, as your skill level increases, your knowledge expands, and your efficiency goes up? The more qualified you are for your job, the more you should charge.

What are you nervous about?

You’re at the point where you know you should raise your pricing, and you want to do so – but now you’re holding yourself back with many worries. Women are especially prone to these type of worries, and I’d like to break them down and debunk them for you.

I know some of my upcoming debunking is going to be hard to believe (or you believe it’s true for other people, but don’t think it applies to you), but all you have to do is prove it to yourself by raising your rates. Do it correctly, and see what happens! If somehow it ends up a tragedy, something has gone wrong. You will need to increase your value to match your new pricing and have a way to get the word out to your perfect customers. If your value is clear to customers, your price will become a non-issue.

Worries:

  • I might get less customers.
  • I will feel guilty stating my prices to customers.
  • People will push back when hearing my pricing.
  • Our perfect customers won’t be able to afford us anymore.
  • I wouldn’t pay this much myself for my services.
  • I don’t deserve this much money; I’m not that good at what I do.

Do these sound familiar? Well, they are just stories that you’re telling yourself, and, happily, they are not true. We’ll figure out what to do to conquer these fears, er, “concerns.”

You can’t raise your rates substantially without making a few changes to how you do things and how you talk to customers. Unless you’ve been creating absolutely top-notch work, with no room for improvement – or you’ve been severely underpaying yourself up until now, you absolutely must add value when you increase rates.

When we restructured Aeolidia, my web design studio, to have a full time employee managing projects and payments, we had to raise rates extravagantly (at least that’s how it felt to me!) from what we had been charging. In addition to hiring an employee, I no longer had the time to be doing work where I was paid directly by our clients, so the loss of my hourly income also meant we needed to adjust somehow. When we raised rates, we started offering much more value, and we continue to add value and efficiency as we do our day to day work, making regular rate increases tied into an increase in what our clients receive from us.

bulletWhen talking pricing with potential customers, be very clear on what people are getting. If rates go up, but customers perceive that you’re offering the same old thing as before, that’s not going to help your case. You need to have solid, defensible pricing that makes sense to you and to your customer. My previous article, A Practical Change With an Unexpected Result, is a perfect example of how clarity in pricing removes customer objections.

People are very conscious of the possibility of being ripped off, especially online. If you are vague about your pricing and/or what the customer will receive, they will feel mistrustful, so make sure it is easily understandable.

bulletBe confident about your pricing. You are not trying to trick your customer, and if you’ve set your pricing thoughtfully, using real data about hours, costs, and value, it will be easy to show that, and you should have no reason to feel anxious or guilty. Never negotiate on your price. Let potential customers know that your work is an investment, not an expense. If you would like to work with a customer who can’t afford you, adjust pricing for them by limiting features, not by arbitrarily lowering price. You may have good results just offering a payment plan. When pricing is tied to value, customers will often happily agree to pay the full price rather than lose features. If you lower pricing without changing what the customer gets, they will feel like you were purposefully overcharging them at the outset. You’re not a used car dealership!

bulletFocus all your information on your customer, not how great you are. Your website copy should not be about how you won this or that award or list out your achievements or skills. Instead it should let your customer know why they would want to hire you, and what you will do for them that will improve their business or life. You want your customer to be mentally reaching for their wallet as they learn more about you and your company.

bulletKnow who your target customer base is – and if it’s shifted with your rate shift, make adjustments for that. Maybe you are too expensive for your previous customer base now. This was one of the most painful things to me about our big rate shift. I hated to let our old client base down, and I mucked up what should have been a smooth transition to a new level of work by trying to offer a super cheap option to budget clients, or agreeing to work with past clients again at a huge discount. It took a while, but we eventually dropped these low-cost options for all the reasons found in Part 1 of this series.

You may get less customers after raising your rates, at least at first – though maybe you won’t! Consider that you’ll need less customers at your new rates, and then work on new ways to attract customers if you don’t see an increase in earnings (work on new ways to attract customers all the time, regardless).

bulletIf you find yourself needing to search out a new customer base, or expand on your existing one, work to be a specialist in your field. It seems counter-intuitive, but if you narrow your focus and narrow your customer base, you often will see a dramatic increase in work. For instance, if you’re a photographer, and your favorite thing to photograph is weddings, drop all family sessions, portrait sessions, etc. from your portfolio and your services, and work to position yourself as a wedding photographer. Almost anyone looking for photos for their wedding is going to be more enthusiastic and interested in a website targeted to wedding photos than to one with a general appeal that doesn’t speak to them.

bulletBe awesome. Really, that’s what this whole series boils down to. If you do incredibly wonderful work that provides value to your customers (for instance, our web design clients should expect to make back the money they spent on us and more), new customers will have already heard of you, they will be dying to work with you, they will be pleased as punch during the process, and then they’ll go tell all their friends about it. You’ll be able to charge what you’re worth, which will enable you to be even more awesome. I love it! Are you with me?

Let’s look at those worries again:

  • I might get less customers. Maaaybe. But you’ll need less customers.
  • I will feel guilty stating my prices to customers. No way! You’re not taking advantage of them, and you know you’re worth it.
  • People will push back when hearing my pricing. Good! That shows you that you’re on target – you need at least some push back to know that you’re not underpricing. Have fun with these conversations, letting the customer know what you’ll do for them, and how excited you are to work on their project. “Winning” a customer is actually really fun, no matter how much you dislike “sales” in general.
  • Our perfect customers won’t be able to afford us anymore. Aiiieee, I feel your pain on this one! But once you’ve decided to raise your rates, then they aren’t your perfect customers anymore, I’m sorry to say. Don’t worry; you’re going to love your new customers.
  • I wouldn’t pay this much myself for my services. Ha ha, no you wouldn’t! That’s because you’re an expert, and it’s easy for you. Your customers have another job they want to work on, and they feel very happy to outsource this to you, the expert.
  • I don’t deserve this much money; I’m not that good at what I do. Really? Really? I’m betting that if you’re passionate about your business, you have put a lot of time and effort into learning all you can, and improving every step of the way. If you truly believe you aren’t worth the amount you need to be paid, it’s either time to improve your skills or to consider another calling. If you do love what you’re doing, but feel you have a lot to learn, you must at least make sure that your pricing is competitive, then do all you can to get yourself to a point where you can make a wage that lets you live the way you’d like to.

What do you think? Did I miss any worries? I’d love to debunk them for you in the comments, so spill it! Why aren’t you raising your pricing? I’d also love to hear from anyone who is now ready to go out there and make what they’re worth!

Clip art by Denise of Nisse Made via The Ink Nest

  • http://www.etsy.com/shop/rewoodtoys Natalie

    This is a fabulous article! It is all so true. We run a home business for woodworking toys and we also run a natural parenting shop. The perfect customer is out there and they will find you! We have learned this all too many times with our retail shop.

    People that value what you are doing will always stand by your product. You will lose some customers by changing prices, but you will gain so many more!

    I find in the handmade market it often gets hard in terms of pricing, because you have so many competitors either just starting out and want to generate sales based on lower prices, or you have these hobbyists that are just doing it for fun and just want to make a few bucks. I find it often devalues products on a whole and makes it difficult for pricing.

  • nichole

    Terrific, thanks so much!!

  • http://www.etsy.com/shop/poochandpuddy Amber @ Pooch and Puddy

    “I wouldn’t pay this much myself for my services. Ha ha, no you wouldn’t! That’s because you’re an expert, and it’s easy for you. Your customers have another job they want to work on, and they feel very happy to outsource this to you, the expert.”

    This REALLY spoke to me. Of course I won’t spend 20$ on a dog collar when I can make my own, but my customers DON’T make their own! It’s like, theoretically, I could sew myself a suit. But I know I’m not an expert and it won’t look nice, so I’ve looked for tailors, and found one I like. I always say, maybe I can do this, but is it worth doing it myself? No. So I’m happy to spend XYZ on it.

    Obviously, customers are doing the same thing. They’re not a different species than me!

  • http://pulpsushi.typepad.com Marilyn

    Thank you Arianne! Between this post and Part 1 – you have really helped me put things into perspective with my pricing, especially when it comes to facing some resistance and how that can be beneficial.

  • http://aeolidia.com Arianne Foulks

    I love this from Natalie: “People that value what you are doing will always stand by your product.”

    Thanks for your story, Amber, and I’m so glad this was helpful, Marilyn and Nichole!

  • http://halfasleepstudio.com Natalie / Half Asleep Studio

    Yes, absolutely! As a graphic designer I have really struggled with pricing over the past year. I’ve charged too little for demanding customers who pay several weeks late, and I’ve charged too much and been turned away by seemingly dream clients (but looking back, it was probably for the best). Now I tailor my prices to each individual customer, taking into account as much about their business as possible, and I gut check each price I come up with to see if it feels right before I hit ‘Send’. It’s really all a learning experience.

  • http://richmombusiness.com Renae – Mommy Blog

    Ooo. I’m soooo favoriting this post and sharing it. What a great questionnaire for people wondering how to price things!

  • http://www.CabinPressStudio.blogspot.com Denise

    Part 2 of course is fabulous + eye opening. Thanks again Arianne.

  • http://aeolidia.com/ Arianne Foulks (@aeolidia)

    Thanks for reading and enjoying! It might be fun for us to check back on this topic after some time passes and get everyone’s stories on how pricing adjustments worked for them. Pricing success stories always make me feel good!

  • http://printablepress-blog.blogspot.com/ Kimi

    All true! I’ve raised our rates twice in the past 4 years, with such trepidation—and each time nobody even blinked. But of course we know there are new potential customers who see our prices and can’t afford them, and quietly go elsewhere. That’s okay too. Hm, thinking about how no one blinked, we still might be charging too little… Food for thought. Thanks Arianne!

  • Julie

    I have been selling my bits, mostly made from recycled men’s ties for nearly a year at little markets. This weekend I am attending my first BIG market and I have been putting off working out my new prices. Your post last week gave me hope that it won’t be that hard and have been waiting with anticipation for part 2. Thank you so much for your perfect timing! You have given me confidence that I have been undercharging a LOT….. Wish me luck. (Creative Oneders)

  • https://www.facebook.com/PetPortraits.by.SusanK Sibil Katz

    Not having much contact with other artisans, I was very surprised to find so many having trouble pricing their efforts. Very enlightening.

  • http://ohmyhandmade.com/members/aeolidia/ Arianne Foulks

    Good luck, Julie!

    Food for thought indeed, Kimi. 🙂

  • http://eirewolf.artfire.com Eirewolf

    “Focus all your information on your customer, not how great you are” + “Be awesome” = Show your customer how purchasing your product will make THEM more awesome.

    I need to work on wording my product descriptions according to the above equation. 🙂

  • http://www.superflylullabies.com julie

    love it. I love anything that remind creatives to value themselves and the tremendous work they do. great points here!

  • http://twitter.com/AmeyaStudio Amy Beaith-Johnson

    thanks for this article. I enjoyed part 1 and part 2. I also too have raised my prices recently and found it has helped my business. I stressed about losing customers and pricing them out of purchasing it, but so far it’s worked out. A resource I found exceptionally helpful in creating a price that values your work and your time in making your product was the book craft inc. great information in there about how to price your products properly and pay yourself a wage. when i used their guide and priced about a few of my products i was shocked at how low my prices were and that I wasn’t really paying myself first. I was more worried about being competitive and not pricing too high beyond what others people were charging. after that exercise, I ran all my products through there and gasped at how much I would need to raise prices, but it was a good idea and it hasn’t hurt my business. if anything it helped and has given me greater confidence in my pricing and my products when selling and explaining my prices to people if they ask. Thanks again for the great post!

  • anastasia

    I loved this post! I’ve thought all of these things at one time or another, and I’ve often had a variant of the last one — “I don’t deserve this much money; my product is not a NEED.” (I make jewelry.) So I’m still fighting that one somewhat. My biggest worry, though, I is that I’m going to be perceived as insensitive for not realizing people are struggling these days. I’ve had more than one customer tell me some version of “how DARE you charge so much when people are losing their homes and having a hard time paying for gas and food?” That made me feel really crappy. Though, I know all that means is, someone who feels that way isn’t my customer. I’m trying to focus on that but it is tough sometimes!!

    • Carol Ann

      I feel that the people saying “how dare you charge that” are simply not your customers! Jewelry is a luxury item and only those who have a little extra to spend on themselves are the ones who will be buying from you. I’ve had customers who’ve said they put aside some money to purchase a piece of jewelry from me, which was so flattering! However, I too struggle with charging a “fair” price for my pieces, all of which take quite a bit of my time to create.

  • HGWjewelrydesigns

    I know my prices are low, but even though it is obvious people still say my prices are too high, so they can’t purchase from me. With the price of silver going up, I am barely making a profit as it is, but I dare not lower what is already perceived as too high. The first person who says my prices are too low, will the the time that I raise them. As I said in my previous post, I find it hard to sell in a show with 8 jewelry dealers ahead of me in a row or across from me, and rarely will raising my prices help people choose my jewelry.

    • Sculptr

      You may be surprised. When I was training dogs, I would always ask new clients what made them decide on me as opposed to other trainers. MANY clients told me that they felt that since I charged more, I was more experienced and a better trainer. I was shocked!! I am now a jewelry designer and am keeping that lesson in mind as I prepare to raise my prices to cover the cost of the silver.

      It is interesting that when I set up a display and I put some pieces in a display case, it is always those pieces that are chosen first. Perceived value. BELIEVE that your jewelry is worth more and your customers will, too! Good luck.

      • http://twitter.com/zoe_rooney Zoe Rooney

        I agree! From a purchaser’s perspective I know it’s a really fine line – there’s definitely a point at which I have a hard time justifying the purchase, but I also have NOT bought otherwise lovely jewelry that is priced too low because I question the quality and workmanship.

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  • Heidi Robinson

    Great article, but the grammar fiend in me wants to point out that you should have said “fewer customers” not less customers. I’m sorry! I just can’t help myself. But its wonderful advice! Thanks for this.

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