A brief transcript excerpt from the YouTube video "Raise Your Prices, Fix The Business" (hosts: Paul and Mike Andes). Mike argues that raising prices can increase profitability while reducing workload because higher-priced services filter out lower-value customers and capture larger profit margins from those who perceive high value. Paul provides supporting numerical context (e.g., moving prices from 35 to 45, and a 10% raise on $70,000 equals $7,000) to illustrate how small price increases can fund roles like an operations manager.
Because we were at 35 when I first started. Now we're up at 45, but we're still closing 100%. Almost a maintenance. Yeah. In this area.
Now, Paul keeps mentioning hiring more people and extending the amount of work that the company can do for customers. But ultimately, when their prices are this low, they need to raise prices and make profit. And I know without even looking deep into the numbers that there's a huge amount of profit that could be had by just raising the price. If you look at all your potential customers, they're going to have different levels of perceived value with your services, and some are going to think it's basically worthless and others are going to think it's worth a lot. Now, when you set your price, anyone that doesn't have the perceived value high enough, you will not get them to accept the job. Now, everyone above that line will accept the job because value is higher than price. Now, when I raise prices, yes, I will lose some customers because they do not perceive the value to be higher than the new price. But also I will gain all the extra profit that is associated with everyone else that had a huge amount of value discrepancy between what I was charging. So in essence, you're going to do less work and make more money. Sounds like a good deal to me.
We can move that price, and that's like an instant fix for the business, because if we raise prices on $70,000 and we raise it by 10%, that's $7,000. There's your operations manager.
