How to increase your prices

Robin says: “A lot of people think that the way to attract new customers or clients is to be the cheapest in the marketplace, however that can deter the business from generating any profit. The reason most businesses go bust is because they are attracting volumes of customers by offering discounts without considering the time and capacity needed to fulfil each request. Typically, they don’t realise this until it is too late and end up eroding all their profitability. The one objective of any business is to make profits and if you don’t get it right you will go out of business.”

Robin says: “Most entrepreneurs set their prices based on how they value themselves, so they are ultimately making a decision for their entire marketplace based on their personal beliefs. But for many people that is fundamentally flawed because their values stem from the fears associated with money that their parents have taught them growing up. That is not a positive way to run a business.”

Robin says: “If you are going to increase your prices you first need to establish a pricing bandwidth. If you are currently selling your product or service for £500 and the most expensive in the marketplace is selling for £5000, the bandwidth is between £500 and £5000. You then need to establish a price point which is just outside your comfort zone. If you feel comfortable charging £1200, for example, then you should set your price at £1500. Why? Because the more you charge the more high-value your product is perceived to be. It’s a niche within itself which will set you apart from your competitors. Furthermore, you’ll also have the benefit of generating some overhead within your business which creates more time, capacity and opportunities for business growth.”

Robin says: “You now need to gather evidence that there is a market of people who will buy your product at the new price point of £1500. If you have already got enquiries from prospective customers coming into your business, then for the next ten new prospective clients, you should pitch the product to them at the new price of £1500. The moment you get a client at the new price point, you have validated it.”

Robin says: “Businesses don’t want to be perceived as the most expensive because they believe that they won’t get customers. But some potential customers look at the most expensive product or service and think they must be good because they are able to charge that price. In pretty much every industry there is a business which is the most expensive and yet they are still able to get customers. You can model some of that success and be fearless with your pricing, because if somebody else can do it, so can you.”

Robin says: “When you put your prices up you may end up getting fewer clients than you had before, but they will be much more profitable, and you will be getting much better results for them because you have more time to deliver a better quality product or service. It is absolutely transformational.”

Robin says: “The most common mistake entrepreneurs make is to base their prices on competitors and assume that it is working well for their business. Most of them don’t know what they are doing. In fact, they probably based their pricing on their own competitors - and you don’t want to copy a business model that isn’t actually working.”

Robin: “If you have existing customers who have already been exposed to your old prices, you should give them fair warning of the price rise. You can also provide them with some extra value in the form of additional features, so they believe that they are getting a better product than the one before. The greatest opportunity lies within the new clients who have not been exposed to your prices yet. It is important to make a clear distinction between the two different types of customers.”

Robin says: “Most business owners don’t have sales training, and don’t think they need it. However, the businesses that are best at sales and marketing often shine through even if they don’t have the best product or service in the market.”