Pricing is always a very sensitive issue. Most of us start out pricing too low. When we realise we need to increase our prices to ensure our business remains viable, (or simply because you haven't raised them for 5 years!) it can be difficult to know how to go about it.
The New Year is a fantastic time to raise prices. As is the start of the new financial year on July 1st. Although you can frankly increase your prices at any time, these specific times of year are familiar to consumers and means it is slightly easier for you to draw this line in the sand.
Here are some strategies you may want to utilise when deciding to raise your prices:
Give Your Clients Notice: There are two ways to go about this. You can either give your clients a few weeks or months notice, and then just raise prices across the board on a specific date (ie. January 1st). Alternatively, you can raise prices for all new clients and give your clients additional weeks or months after this date, if you feel this would make them feel more comfortable. Through personal experience I would suggest option A as the way to go otherwise administration becomes very difficult as you try to manage who is on the new prices and who is still on the old.
Update Your Website: In general I recommend you include your prices on your website. At the same time you are giving your clients notice, I would suggest you note on your website that your prices will be rising as of January 1st. This serves two purposes. Firstly, new clients won't be surprised when they decide to engage you in early January only to discover the prices were higher than they thought. Secondly, it may encourage people who have been meaning to start using your services to make their purchase before the end of the year.
Review Your Pricing Structure: As you know, there are many different ways you can price your personal concierge services. When increasing your prices, now is the perfect time to decide if you increase, decrease or alter your options. For many years I offered 5, 10 and 20 hour packages. Then it got to the point where the frequency that people were going through the 5 hours packages was making things challenging at our end. So I decided to change to 10, 20 and 50 hour packages. In this process I also increased the prices, and made our standard hourly rate a lot higher than the hourly rates of the packages.
Be Prepared For Questions: Yes some of your clients will likely question your reasons for increasing your rates. You may actually find that no one questions you, after all, increasing prices is a natural part of any business. Giving as much notice as possible can also make the process easier for clients. However, I suggest you also create a standard response to queries. This makes the price increase process less stressful for you, and it also reduces the liklihood that you will relent for a particular client just because they have asked you to. If you don't have your response ready, it is very easy to just agree to keep their price the same. Please don't! I assure you this just creates headaches. At one point I had so many different hourly rates for my clients, invoicing became a complete nightmare!
So, should you actually increase your prices?
Generally the answer is yes! I have found that the majority of personal concierge businesses, especially new ones, don't charge enough. Here are some other questions to ask yourself:
How long has it been since I increased my prices? Many businesses automatically increase their prices every 12 months. For me this is too frequent as it means that I would either start charging unusual rates like $62.50, or my prices would start to rise too quickly. I generally increase prices every 2 to 3 years. If you haven't increased your prices for 3, 4 or more years, then I would seriously review things. Even increasing your hourly rate by $5 can make a huge difference to your bottom line, but it can been seen as negligible in your client's eyes.
How do I want to position myself in the market? I personally don't recommend positioning yourself as the "lowest price guaranteed" concierge service, as I don't feel this is the nature of our industry. This is entirely up to you of course. However, I would consider if you want to be seen as a high end luxury service, an accessible service for families, or somewhere in the middle for businesses or corporates (these are all just examples). If you are targeting high end clients but have a relatively low price point compared to not only your competitors, but also similar industries used by the same people, then I would consider making a dramatic increase to ensure your pricing reflects your positioning. This goes for whatever market your are targeting - ensure your pricing reflects their expectations.
Am I making money? Yes, for a certain period of time in all businesses you may need to sacrifice an income to grow your business. However, your business does have to remain viable. Your costs may be increasing due to inflation, changes with suppliers and insurance, or employing staff. The prices you have previously set may not match your current business expenditure. Review your income statement and ensure you are clear on what your break even point is. I also suggest running some calculations to see how your bottom line changes when you make $5, $10 per hour, or more increases to your price. You may be surprised at how such a small increase can change your earning potential.
Are you going to increase your prices this January? What resistance do you come up against when you think about this? Are there any other barriers (real or imaginary) that are stopping you from increasing your price?
>>Not yet set your prices? Needing help? We now have 'How to set your pricing' training within The Concierge Secret Society including a 35 minute training video and accompanying workbook. Get immediate access by joining The Concierge Secret Society plus access to all the amazing resources inside.