How to RAISE your prices - TGIM #4

Hey everyone, welcome to a quick TGIM Mastermind video. Usually I do this on a Monday, that's the TGIM, but yesterday 50 Cent dropped one of my videos and said that he really liked them and he shared my video on his Facebook page and his Twitter page and my day just kind of super exploded on me, had a massive headache by the end of it and said, you know what, I want to make this video when I am feeling good and on top of my game. So a question came in from one of my online mastermind members, Mike, who has a service-based business and he's feeling like he's underpricing himself. The other shops around him, his competitors, are charging at least 30% more. He wants to raise his prices but he's concerned about losing his clients. He's wondering how to— how does he do it? How do you raise your prices? So a couple of things that come to mind. You know, as an entrepreneur, you never want to be the lowest cost provider because somebody could always do it cheaper, right? Somebody could always find somebody else to do it cheaper than you. At the start it's okay, you know, you're building up your experience, your credibility, you're getting the roster of clients, you're getting some word of mouth happening for you, but at the end of the day you want to think in business you make money by providing value. You make more money by providing more value, and if you're providing a lot of value, you don't want to be at that low-cost provider. You always want to think, how can I add more value to the relationship so I can charge money? It's not bad when you're doing it yourself if you charge a lower price because you have low overhead, you have low cost, it's just you. But if you were building a team and you want to continue to build that team, if you are the low-cost provider, it's really hard to pay your team and then still make more, a little bit yourself to be able to take home. It's really hard when you're the lowest-cost provider. So again, always be thinking about providing value and not cost. That being said, how do you go about increasing your prices? One, I like to think of it as, uh, since you're a service-based business, your supply is limited. Supply is your time, your personal time, the time of the people on your team. Your supply is limited. If you're providing a ton of value at a really good price, you're going to get lots of people coming, right? You should. If you're not getting people coming, people are talking about you, repeat business, referral business, if that's not happening, you're not doing a good enough job over-delivering for your clients, right? So you have to make sure people understand what you stand for, right? Your one word, that you're applying your one word, that you're living your one word, that people understand the difference that you provide versus going somewhere else. You have to make that clear in all your marketing and every conversation you have with them. And if that's working and you're at a low price, you're going to get tons of people coming, right? You should feel like, "I don't have enough time to handle all these clients," right? If you're not, then you got to increase the value and increase the over-delivering for them and increase the marketing to help them understand why and how you're different. Because if I can't tell why you're different than the next guy, then I'm only going to compare on price, right? If I think you're the exact same as the guy next to you, I'm going to go to wherever is the cheapest price. Where if I understand the difference between you and the next guy, then price is still a factor, but it's not the only factor, right? Then I'm calculating a lot more things in my head than just who's going to give me the cheapest price, right? And so that's on you to figure out how are you going to market yourself and make sure people understand how you're different. And that means you'll lose some customers, That's great, but they're not the ideal clients. So your supply is limited, you should be attracting clients who love what you do, who keep coming back, who are referring clients to you, and your supply is shrinking. Like, I have no more time in the day and I have too many customers at this low price. You can start increasing your pricing. Second thing to think about is what I talked about with ideal clients. You want to have clients, and this is for any business, when you're first starting up, you often just work with anybody, right? Like, I need money. I need to survive, I got to pay my bills, and you take on a lot of non-ideal clients. And these are the guys who give you the headaches, they hassle with you, they're, you know, they could be rude to you, you know, they create a lot of the pains and problems in your business. 80% of the problems come from 20% of your customers, definitely, at least. And so you can't be focused on keeping every single customer. It can be very liberating and an amazing experience for your business to actually fire some clients and for the wrong clients, the non-ideal clients for you, to go somewhere else. Like, that's good for you. That's good for business. Because when you're working with ideal clients who understand the value that you're providing, again, you're making sure you do a good job explaining it and they understand it, and they can make an educated decision whether to go with you or somebody else based on what you're promising value. When you start working with those clients, man, life gets a lot better. You're charging more, you're getting more referrals, you're happy, there's less issues with the customers, they're happy, they're spreading more word of mouth about you. You want to identify who are the target clients that you're working with, not just in terms of the size of business and the types of projects that they have for you, but also their values, right? Coming back to your one word, like the clients who appreciate that, they understand it, they like it, They love that about you. So you want to be able to target those ideal clients and don't worry so much about losing the other guys because the ideal clients will be your gold mine for your company. And then 3, if you're worried about increasing the prices and people giving you feedback and they're upset about it, what you can easily do is grandfather people in and slowly adjust it. You can say, you can tell everybody, hey, our new rates have gone up. We're now the same, the same rates as everybody else, the same competitive rates, but we're still gonna provide the amazing value that we stand for, that you've come to us for, and for you guys, for the next 6 months, we're gonna give you your old rate, and then after that 6 months, we're gonna go back to the full price. And I would do on the invoices for those guys, I would show them that here's what the full rate should be, but you get a discount being a preferred loyal customer or whatever. And then after the end of that time period, 3 months, 6 months, however long you want to do it, you increase the price on them. So they're not shocked, they're not coming in and like super sticker shock right away. It gives them time to make a decision and also gives you time to see, is this person, you know, an ideal client for me? Is this somebody who I want to continue working with or not, right? Again, if they leave you because your price has gone up too much, then it's probably not an ideal client. That being said, I've always found that I have a soft spot for some clients, and I think a lot of entrepreneurs do have a soft spot for some clients. There are some clients who you fall in love with their story, you fall in love with them. They're great clients in terms of dealing with you and appreciating the work that you're doing, and I've given some discounts and done a lot of work for free for people who just couldn't afford it. And that may be something that you want to build in as well. You have some clients that you know they can't afford it, you know they're not a big business, you still want to support them, and you have a certain percentage of your clients that you keep at a lower price. And they have— you have an understanding, like, because they're small, because— like, let them know that there's a reason why they're getting a better price. But don't let that be your whole business. That's like 10% of your clients kind of thing, right? In terms of dollars, not in terms of your client base. Because it's great to do charity, and it's kind of charity, and I love giving back and being part of the community. At the same time, you have to be around, right? It's great to want to give back and help, and the way to do that is to be able to build a bigger business, build a solid business, because you could volunteer all day long and be out of business in 3 months, and that's not going to help your community at a bigger scale, that's not going to help you. And so focus on building your business, focus on getting ideal clients and having a good price. Even increasing prices, maybe I would want to increase my prices ahead of my competition. You're under, so at least matching them. And then if there's some clients that you really want to keep and you really have a soft spot for, as long as it's under that 10% of your revenue, I think it's okay to have some that you help and give back to and, you know, the clients that really make you feel good and you know they're special. That's it. TGIM. Thanks for the question, and let me know what you guys think below in the comments. Believe.