The right way to increase prices without losing clients. EP #269 - Den Lennie

You know, there is a right way to increase prices without losing clients. And that's what I'm going to share with you on today's show. Hi, it's Dan Lenny. This is the how to Scale a Video business podcast, episode 269.

Welcome to the Video Business Accelerator Podcast. Each week we uncover the secrets to creating a wildly successful and scalable video production business. With your host, Dan Lenny, discover how the accelerat is transforming the lives of our members at www.videobusinessaccelerator.com. enjoy this episode.

G', day, guys. I thought it was worth revisiting the sales conversation because I know it is an area that a lot of creators find quite uncomfortable. And if you're wondering about the importance of discomfort, go back and listen to episode 266 where I talk about why you must embrace the discomfort of growth. And growth means.

Sales, and it means price increases. The single fastest way that I can impact a business immediately is by reviewing their pricing. And almost everyone I meet when I begin working with them, in fact, I'm going to say everyone I meet when I begin working with them doesn't charge enough. And that is based on a lack mindset and a fear that if they charge more, the clients won't want to work with them. And there's two distinct parts of that. Okay, the first part is, oh, I might lose the client, which is possible. But the other part is if the client chooses not to work with me, then I'm going to feel like I'm not good enough. So there's two very distinct sides to that seesaw, if you will.

But the most important thing is about self worth. And this is what this really comes down to, is if you genuinely offer an incredible service.

Then you should be fairly remunerated for providing that service.

And one of the areas where you can immediately make more money, and I mean straight profits. And I'm talking about as much as 20 or 30%.

Is by adequately billing for pre production and the development and conceptualization of the entire concept for the video. Because that is the area where very few creatives actively charge enough. And it's an area, I think, of discomfort for many people because they're like, well, it only took me five minutes come up with the idea, or it took me half a day to come up with the idea. So I'll only charge them three hours. And that's a huge mistake because we're not plumbers, we're not tradespeople who are just providing a service at an hourly rate. And if you Are then we probably need to talk because you are leaving a lot of money on the table. And you know, the primary goal of running a business is, is to make a profit for the least amount of effort possible. That is the fundamental moral obligation of a business owner. And I think a lot of times there is a gray area where I think, you know, and my grandmother said this to me, you know, son, if you work hard, you'll do all right in life. And there's this myth that you have to work hard to be successful. And I'm going to challenge that and say, no, you need to be smart with how you work and you can be successful. Because to me, success isn't just financial success. To me, success is the fact I can work three and a half days a week and I live by the beach and I get to enjoy lots of various.

Parameters in my life. Friendships, music, photography, relationships with my wife, time with my dogs, time with my, my mates.

And so in order to do that, you can't afford to be working 60 to 100 hours a week because that's, you could, you could be working 60 hours a week and making a load of money, but you've got no time to enjoy it. So for me the balance is time, money and freedom and time and money.

Money buys you time because if you do everything yourself, then you're going to be working to the bone. If you're making enough money, you can hire help and that means you have to do less and you can have your team help and support you.

So you know, the, the key to this is to increase your prices or bill correctly for the service you're offering. And, and you know, you can increase prices with existing clients. And I think we're in a particularly unique time and period here. This has been recorded in, in where are we? June 2022. The world has come through a two year pandemic.

Inflation is at an all time high. Interest rates are going up or have gone up and will go up again. There's a conflict in Ukraine, China's in lockdown and there's a knock on effect. The cost of grain is getting more expensive because of the war in Ukraine, which means the cost of food production is going up combined with the cost of transporting that food. And a lot of resources that are coming from China are being delayed because the country's in a lot of lockdown in Shanghai and so on and so forth. So we're going to go into quite a challenging period for a lot of businesses, but it's no more challenging than the last two years when we couldn't do business at all. So we have to keep perspective on that. There was a period where we weren't able to do business, and so now we are. But it's challenging. And so, you know, everyone's aware that things are becoming more expensive. And so it's absolutely a great time to be reviewing your pricing. Very, very rarely do people just want the cheapest price. And if you are competing on a project just based on price, then the, in the spirit of extreme ownership, you have to accept that you haven't done a good enough job of demonstrating value.

Or they're actually not the right client fit for you or something else. But we have to constantly look at ourselves in the mirror and say, did I do enough here to fully explain the value of choosing me over someone else or our company over someone else? And usually.

Usually it is the case that assumptions have been made. Not enough. Deep questioning was asked at the early stage of, of client acquisition and, and assumptions were made that the client fully understood the value of working with us. And so, you know, when I say, put your prices up, it's not just like, hey, my prices are going up. You have to kind of explain why.

Or you say, look, guys, just to let you know, we're having to adjust our rates and our fees because life is becoming a lot more expensive and we need to be able to pay our team. And at the current rates, which we haven't adjusted for, in usually cases, years.

It'S just not feasible anymore. And so if we're not making a profit, then we're not going to be in business for very long, and that means we can't support you. So we are making an adjustment across the board to our costings, and we hope that you feel this is fair. And that phrase, we hope you feel this is fair, you're actually asking a human being to assess what you said and question if it's fair or not. And human beings love fairness.

When I talk about, to my clients about putting the prices up, it's not to try and screw more money out of people. It's like, no, we are providing this value. We feel it's now worth a different price point than where it was maybe two years ago. And here's the reasons why we believe this. And if you'd like to discuss it with us, we're happy to jump on a call. And a lot of sales really comes down to confidence and experience.

You're not born knowing how to sell in the same way that you're not born knowing how to ride a bike. You have to learn it and you have to do a lot of it to get good at it. But.

The right way to increase prices is to simply start billing for your pre production time and then the other thing to do is to add a production fee of between 10 and 15% to every invoice. And I remember a particular client joined us almost two years ago now and on the very first call he said, I added that production fee and I no one batted an eyelid and it was an extra 12 and a half percent on every invoice forevermore. And that's probably been worth hundreds of thousands in revenue to that particular client across the year or two that he's been working with us. So oftentimes it's small changes. And yeah, I mean I actually have a book called.

The Filmmaker's Guide to Budgets and Quotes that increase profit by 20 to 30% instantly. You can find that on Amazon on, yeah, just Google on Amazon and I think this might be on our website as well. It's, it's like, it's not very expensive book, but it's got some great insights into how to increase your prices the right way and, and make more money.

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