I have been working with an accelerator member for the past couple of months, and we finally came to the point where we had to do something about her pricing.
I brought up pricing the very first time we met, and she immediately told me that her pricing was set and she didn’t want to change it.
“Okay,” I said. “We’ll leave pricing alone for now and take a look at the other parts of your business. But once we’ve done that hard work, we are talking about pricing again.”
She agreed and dove head first into everything else. She renegotiated all of her vendor contracts, looked at her payroll to make sure it wasn’t out of whack, and implemented new marketing strategies to increase demand for her service.
After four months, every stone had been overturned, and she knew it was time to talk pricing again.
She explained to me all of the reasons why she couldn’t possibly raise her prices: What about the competition? What if I lose clients? What if I felt badly about charging more?
All of these were valid concerns, but none were good reasons to ignore pricing. So we took the first step and actually broke down her pricing structure. We looked at what she charged and how much time it took her to provide the service. And you know what we found?
She was charging her clients $6 per hour. Yes, that’s right. Only $6.
Please tell me what on Earth you can still pay $6 per hour for? Not a manicure. Not a massage. Not getting your lawn mowed. Not getting your hair cut. Not for a babysitter. Seriously, I can’t think of anything I can pay $6 per hour for.
And that was when the lightbulb went off. She agreed that her pricing, when viewed from this perspective, didn’t make any sense. She raised her prices, wrote all of her clients a letter explaining the increase and waited for the onslaught of angry emails or even worse, for all of her clients to walk out the door.
And guess what happened? Nothing (almost).
She got two emails in response to her letter. She spoke with both clients and explained that she had been charging only $6 per hour. And you know what those clients did? They agreed that she should raise her prices!
Yes, thinking about pricing is scary. Sometimes you have no idea what the right price should be. Other times, you know it should be higher, or lower, but you don’t know how to communicate with your clients about it.
If you have ever had any of these questions, I encourage you to join us at our next seminar series, which will be all about pricing. We are going to hear from some current Her Corner members who have recently gone through a price change. They will share with us how they thought about it, what they did, and how they communicated it. We’ll have some small group work time so that you can present your current pricing and potential changes and get some feedback.
Pricing doesn’t have to be scary. We can use the power of collective intelligence to figure it out. See you there!