IS IT TIME TO RAISE PRICES?
Are you in a service business? If so, you already know that time is your
most important product.
Are you charging enough for that time? Can you charge more and still keep
your customers?
These are important questions that should be asked and answered regularly as
your business grows.
I have known many self employed people who are working 10 to 14 hours a day
and sometimes more to keep up with the demand for their services. In spite of this
pace they are always broke and have a difficult time paying for their supplies and
materials. When asked why, the answer is often that they must remain
competitive so they can't charge anymore. Does this really make
sense? Some of them will hire someone to help out. This just makes matters
worse. If you are spending 10 to 14 hours a day to do the work and are not
making enough money, you can't afford any help.
Always keep the rule of supply and demand in mind. If you are overloaded
with work it is probably because the service is popular and the customers really
like your work. It is almost certain that you are reliable and maintain an excellent
rapport with customers. In other words, most of your customers want you to do
the job for them. This means you are in demand. If you are working 10 to 14 hours
a day to meet that demand, there isn't a sufficient supply. It is time to
take steps to balance out the situation.
The first step is an immediate price increase. Your first response will be
that you are going to lose customers when you increase your prices. This is true,
you will lose the ones that are with you because you because of price. You won't
lose the ones that really appreciate your work. This process will not hurt you
financially. If you are working 12 hours a day making $360 for your services, your
hourly rate is $30.00. If you raise your rates significantly and lose one third of
your customers you could be working 8 hours a day and still making $360 or
$45.00 per hour.
Or if you want to continue working 12 hours per day you could increase your
customer base and make $540 a day. That would raise your weekly income by
$900 for a five day week without increasing your hours.
This idea scares many people because they believe that all their customers
will quit them. If you are really worried you could increase in increments over a
one year period until you have the amount of work you can comfortably handle.
In truth, if you have developed a rapport with your customers you will not lose
them. Think about it for a moment. People are willing to pay for what they want.
Why would a person pay $30,000 plus for a luxury car when they can purchase a
compact for $10,000. After all, they are both cars with wheels, seats, and
engine and all the other equipment. Why would someone buy a $1,000 sport coat
when they could get one for $50.
There are examples all around proving that people are willing to pay more
for something they consider to be better. If they really want you to provide the
service they will pay for it gladly.
In my woodworking business I have gotten jobs when my bid was more than 40%
higher than the next bidder. These people want my work and they are willing to
pay for it. So next time your volume is too high consider increasing your prices
before hiring anyone.
For additional information on Self Employment, you can
write billbenitez@ureach.com or visit my web store -
http://www.abenitez-ebooksandmore.com ...
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