There will come a time in your business when you need to increase your prices. This happens when a client’s needs change, when you uplevel your services, or simply when the cost of providing your service has increased and you need to ensure that you’re still profitable.

My guess is that time is right about now, whenever you catch this episode. If it’s been more than a year since your last price increase, you will want to listen in.

The challenge comes when you’ve determined a price increase is in order, because then you need to have a conversation with your clients about what that looks like. Talking about money can feel really difficult, if you’re not prepared or in the right mindset.

On today’s episode, I’m sharing how to prepare clients for price increases in a way that won’t scare them off…and that still feels really good to you. The service you provide is valuable and you deserve to be paid for that value.

If this is a difficult concept for you to remember when you’re having money conversations, you’re going to want to listen in.

Links and Resources:

• Episode 2: Is Your Pricing Aligned with Your Life?
• Template for client evaluations when raising prices
• Path to Profit: Money Map

Transcript

Tracy Jepson 0:10
Whether you’re looking to grow or ready to scale and so navigating the challenges you face as a business owner are hard, and knowing which steps to take next can be overwhelming. Each week on Beyond the bank account, I will walk you through overcoming the overwhelm and confusion around your business. From the bottom line and beyond. I’ve worked behind the scenes and in the weeds of small businesses, including several my own for over 20 years, and I have a personal mission of guiding owners to have profitable sellable businesses while living the life that you’ve always dreamed.

Tracy Jepson 0:38
Hey, guys, welcome back. I’m so excited to talk to you today, we had talked in episode two significantly about profitable sales and how to set your prices so that way you would be profitable in your business. But there’s a bigger conversation when it comes to pricing. And this is something that I talk to a lot of business owners about. Is Tracy, or I get the question. Hey, Tracy, you know, how do I raise my prices on my clients? What is that conversation sounds like? What if people tell me that I’m too expensive? All of these questions, again, I will redirect you back to the entire money mindset conversation that we had in that episode too. Because some of these questions will stem from that the fear of rejection for for you, if a client decides to turn you down because of your price. If they go somewhere else, because they want something cheaper, I think we’ve all seen the little funny picture of the horse or the meme on online. That’s it looks like it’s hand drawn by about a three year old and people say you get what you pay for. I 1,000% believe that to be the case, I definitely know it in the bookkeeping industry. When people say wow, you know I can I can get bookkeeping a lot cheaper somewhere else. And I say, Yeah, I can get clients that pay a lot more to it kind of goes both ways. So just know the quality is not always the thing that comes with, with high prices. And it’s not always the thing that comes with low prices, either either. Some people just simply don’t know how to price themselves.

Tracy Jepson 1:59
But I want to talk more about the conversation around pricing and around those conversations that you can have in your sales calls with clients. Or as you get ready to increase prices, I think we have all felt the the inflation of the economy going up right now, everything from milk, to gasoline, to services across across different industries are all increasing. And in order to stay competitive, you may have to increase your price as well, or just in case that you want to maintain your existing lifestyle, you’re gonna have to increase prices. And some of those can be really uncomfortable conversations. But I think there’s also a really great opportunity to review your business at the same time and decide, is it the prices that I need to raise? Or is it the clients that I need to get rid of. So I have clients that will pay me what I want to charge. And I think that those are two very distinct differences, I have a template that I love to use when starting to look at client evaluations as I’m starting to raise prices. And I will link it in the show notes to this. So that way, you can actually walk through all of your clients that you work with today, and kind of grade them and I’ve got some different scales that you grade them on. But basically figuring out are these clients that we even want to have those sticky conversations with, sometimes pricing changes, we’ll just make some of those clients go away. Other ones, you may want to increase it even more so that way you can put the little pain in the ass tax onto their pricing as well. And yes, that’s a thing. So just know that if you’re a terrible client to somebody, that they are going to charge you more in order to keep providing you services, if you’re lucky enough for them to hold on to you to begin with.

Tracy Jepson 3:34
But when you’re talking to your clients about pricing on a sales call, and you know, it’s inevitably going to come up, they’re gonna say, Well, okay, great, how much is it? And when do we start, I would like to get it to the point where you’re just having those conversations and we just get to the when do we start portion, if you can explain your value to a client in whatever service that you’re providing, the question around your pricing is going to be significantly decreased and much more or less comfortable. For everybody on the call, once you know that you can provide the right value to the right type of client, pricing becomes really easy. So not only have you set your prices, so that way you’re profitable, but you’re starting to bring in the type of client who’s going to pay what you are worth. So again, some of those conversations around sales, they’re not necessarily sticky, because your price too high or because you’re you know, you’re unsure of what the clients willing to pay, it’s actually getting the correct kind of client on that call to begin with, and making sure that you are talking to qualified leads. We are gonna go all all in on this subject here in a couple of episodes that we’re getting ready to record but we want to talk about you know how to actually get your niche how to find the right types of clients. And so I’ll encourage you to skip to that episode. But for right now, just know that sometimes those sticky conversations are simply because we don’t have the right clients on the phone to begin with.

Tracy Jepson 4:55
But when we’re talking about price increases, I recommend giving your client a significant amount of time in order to make the decision for themselves, if they want to move on to a different service provider, think about the types of services that you’re providing for them. Is there a transition period? Would there be something that you would need to help, you know, teach or give information to another provider so that way they can help your client? Is that a fee, you’re going to charge in addition to, if we off board, bookkeeping clients, there’s a lot of times the expectation, just kind of as a general rule in our industry, that if a prior or that if the next, you know, bookkeeper or something has questions that our team would be able to answer those, and we give them a specific period of time. So we’ll offer an onboarding call that their new provider is going to be a part of, so that way, they can ask all of their questions. And then really, once we have settled that call, we’re kind of moving on from there, but your services may be different. And you may need to actually provide someone a little extra assistance for off boarding. And in that case, you could again, charge them an additional fee to continue to do that service. Or you can do it as a courtesy, I would encourage you to charge for it. Because you will start to learn on this podcast very quickly, that we don’t do a lot of free around here. And I want to make sure that you’re getting paid for your time or for your team’s time to help offboard some of these clients, but after you’ve given them an extended period of time, I think 60 days is a perfectly fine amount of time for a price increase. And again, it kind of depends on what you’re increasing it for, are we really just doing a price change? Or are we doing a scope of work change are you having to increase the price on a client because actually, there’s scope creep.

Tracy Jepson 6:33
So it’s not necessarily that, you know, inflation is just hitting you or you’re just in a place where you need to make more money or that you need to bring on a new team member, or have they actually changed the scope of work. And in that case, those conversations are much easier, because it is very clear to be able to go back to your initial contract, look at the initial scope, show them what has changed, or what additional duties that you’re doing, and what the price is to continue doing those services are. If those if that client at that point says you know, I don’t want the price increase, you immediately have to stop doing the additional scope of work, because it’s going to be outside of the availability for you to make money on the job. So just know that if there’s a scope creep issue, that conversation is a little bit different. And you can very clearly line out why it is that you need to increase your prices. But if you’re just doing your annual, annual price increase, or you’re getting ready to do a new contract with a client to renew something that they’ve been working on you with some time, again, a 60. day notice is often often great courtesy. There’s also no like specific percentage to increase your prices. Go back to episode two, go back through the budget process. What do you need at home? What do you need in your personal life if you have not had access to my money map course, or I give you the templates to walk through exactly how to set your prices that were profitable. And you’re setting aside tax and paying yourself, I would encourage you there’s a link in the show notes to get access to that course, and be able to really walk through how to set those prices properly. So when you’re doing an increase, we need to see what you’re increasing your prices for have you brought on more team members? Have you brought on additional softwares? Is it actually costing you additional to provide the service or is the expense of your business going up? These are different ways to start looking at why you need to increase prices. And if it’s just because that’s totally fine too. But we need to get to a correct amount of money that your clients are going to be willing to pay for that service. So sending out an email, if you’re regularly meeting with your clients. On top of that email as well.

Tracy Jepson 8:39
I would also make sure that you’re having those conversations in those meetings to let them know there could be questions that are coming up, people may want to know, you know, again, what their timing to decide if they’re going to continue with you. You’ll want to make sure that you’re also getting new contracts or new engagement letters signed with these price increases just so that way you have the backup to go along with it. And it also locks your client in for an extended period of time with you to continue working one on one. One question that comes up a lot with clients and with prospects is what if somebody says no to my pricing? What if somebody says no to the increase? Well, you have some choices, you can continue to provide their service at the cost that they’re at today. Or you have the choice to remove them as a client, it may make sense for you to increase prices on certain clients and not others. You may have those long term clients that you just love and that you light up and you know are so excited to see when they join you on a call that you may not be interested in raising that person’s price. Again, we kind of talked about the peat attacks a little bit. If you have clients that are frankly just exhausting or that you cringe every time you see their name in their inbox. These are probably the clients that we want to start raising prices on first.

Tracy Jepson 9:55
So not only that, it makes you feel better for working with them because you’re making more money but it all gives them an opportunity to exit stage left and go find a new provider to work with. So whether you’re concerned about a prospect on a call, saying no to your price, or you’re worried what’s going to happen when you tell a client that you need to raise their prices for the next period of time, just remember, the service that you provide is valuable, and that there’s always going to be the right type of client that’s going to be willing to pay what you’re offering, as long as what you’re offering is valuable. At the end of the day, if you think that funny conversation is uncomfortable, just know that your clients are probably in that same boat, and that the more communication that you can create around the pricing, the value of your services, and just making sure that the client and you are on the same page, the better off you’re going to be and the less sticky that these money conversations and these price increases, conversations are going to be good luck and if you have any questions, send me a message on my website and we can continue the conversation around pricing. It is definitely one of the most impactful things that is going to affect your business and we are going to talk a lot about it on the future episodes.

Transcribed by https://otter.ai