Dec
10
Johnny raises the stakes (and his prices)
I’m doing something kind of scary. And for once, “something scary” does not involve putting any part of myself between the jaws of a crocodile.
What I’m doing this time is scary on a mental level. Specifically, I’ve decided to raise my prices. Starting in 2010, this here guy with an apple is going to be more expensive to work with.
Setting prices — and especially upping prices — is an interesting quandary for any fledgling business. When I realized I’d be raising the bar at JBT, Inc., I went through a range of emotions. First I was excited, then nervous, then tired, then giddy, then mentally deficient, then largely reticulated. Then I figured I should write about it for IttyBiz, because IttyBiz readers have faced or will eventually face the same issue.
And also, December is eggnog season. And you know it’s going to get sloppy around this blog when eggnog season really kicks in. If I don’t contribute something and Naomi is the only person writing this month, you’re going to get only scrawled versus of “Louie Louie” and drunken rants about the prime-time superhunks.
So yeah. Let me tell you what’s been going on.
2010 means a lot of things. It’s two years before the apocalypse and it’s the year we do the second set of events surrounding that giant monolith that NASA apparently found near Jupiter’s moon Io — the monolith that makes apes smart and gave birth to that big space baby thing. The dawn of 2010 also marks the end of the first partial year of the Johnny B. Truant biz, AKA “Naomi’s big gamble.”
And, I’m happy to report that with four months remaining before I can say I’ve been doing the Johnny biz for a full year, things are going smashingly well.
They’re going so well, in fact, that if you send me an email, I’ll sometimes take a week to respond. (If you contact me with a job, however, I’m much faster because I like money.) Things are going so well that in the evenings, I sit in front of the TV until 10:30pm or so with my laptop on my lap, trying to catch up on loose ends. Things are, in fact, going so well that I hired an assistant (kind of). I mean, I manage to get to the gym and I manage to spend time with my family, but things are going so well that it’s stupid-crazy around here.
Not that I’m complaining — especially in this economic day and age. But all the same, wouldn’t it be cool if I remembered what reading a book felt like? Because Stephen King has a new one out, and it looks way cool.
Every successful IttyBiz will get to this point eventually, so listen up if you plan to be successful. I’m going to say some stuff now to try and convince myself that it’s true, so on the off chance that I’m correct, maybe it’ll be instructional for some of you, too.
(And if I am correct about this stuff, someone tell me, because I only know it in theory, not from experience. Kind of like how I know that in theory, The English Patient was supposed to be a masterpiece, but in my experience, it was a big piece of shit.)
Anyway. The part with the subheads and the axioms.
Business principle # 402432: When your docket gets full, raise your prices. Like always, unless you’re a big pussy.
The ballsiest version of this goes, “… DOUBLE your prices.”
I’ve heard this again and again, but it’s easier said than done. The theory goes something like this: If you spend 10 hours doing work at $25/hour, that’s $250. If you raise your prices to $50/hour, you’ll be able to make that same $250 by working only 5 hours. And if people love what you do so much that they still clamor to pay the doubled prices and you find that you’re still booking 10 hours, then congratulations: You’ve doubled your income.
And actually, if that happens, I believe you’re then supposed to double your prices again. Double until you have some room on your calendar. The idea is to dissuade all but the people who really, really want to work with you. You gain time and you gain money. Good stuff.
But as someone who has never really ventured a dramatic price increase, this is all kind of scary. I think it’s probably scary to all who attempt it. Here’s what a typical person will find themselves thinking:
1. What if I raise my prices and lose all of my clients? i.e., what if I can command X customers at rates of $Y, but can’t command even half that number of clients at rates of double-Y? Then I’ll actually be making less. And that’s not cool.
2. Do these pants make me look fat?
But you know what I’m realizing? Even with the doubts and questions, you’ve gotta do it. Maybe you don’t have to double your prices, but they have to go up when you get booked. It’s part of believing in your own value — and your value (as well as the perception thereof) — is part of the reason that people are coming to you in the first place.
When you’re a one-person shop, it’s scary to rock the boat. This is why people waffle on hiring employees or an assistant — they understand the principle, but secretly doubt that they can make enough money to pay for the help.
Similarly, when you’re an ittybiz, it’s easy to rationalize that yeah, you’re fully booked and yeah, you’re pulling your hair out because you’re working every second, but yeah, it’s working and you’re happy with your income and, shit, most people would be delighted to have your “problem” of having too much work.
So you sort of think, I’ll just keep working 25 hours a day at my current rates. I’ll manage somehow.
Yeah, fail. Don’t do that.
I know it’s freaky, but you need to give yourself some breathing room. If you’re that booked, you’re in significant demand. And if you’re that booked, you can (and should) raise your rates. True, you’ll lose some jobs. But you won’t lose enough to offset the gain you make from the higher prices you’re commanding from the clients who stay with you.
So here’s maybe a good progression to follow. It’s kind of a to-do flow chart. Follow it and you’ll be okay, believing and progressing slowly.
1. Wait until a potential job shows up that you don’t want to do for some reason. Maybe it’s a shit job, or maybe it’s a really hard job, or maybe it’s just something that won’t fit into your calendar.
2. Quote a stupidly high price for that job. Like double what you’d normally quote. Because remember, you don’t want to do it anyway.
3. If that job goes away, cool — because you didn’t want it. And if the client agrees to the price, then yeah, you have to do the job. But so fucking what, because you’re getting overpaid to do it. And also, congratulations — you’ve just discovered the true value of that job. It’s higher than you thought it was.
4. Repeat with the next job you don’t want to do.
5. If you keep getting refusals on these stupidly high quotes, stop here and do not raise prices.
6. If, however, clients keep agreeing to these higher quotes, you’ll start to realize that you’re actually not over-quoting for those jobs. The truth is that you’ve been under-quoting for your other jobs. You now have permission to start believing in yourself more.
7. Once it feels like you have consensus — and once you’re totally booked and over-busy anyway — then go ahead and raise those prices. Cross your fingers beforehand.
Yeah, I agree — it’s freaky. And in my own adventure, there’s a part of me that says, “Dude, don’t raise your prices when 2010 rolls around. Sure, you’re overbooked. But what if higher rates make everyone bail?”
Then this other part of me is like, “Dude, chill. You’ve gone through the 7-step process. The value you’re providing is higher than you think it is.”
And then this third part of me is like, “Dude, where’s the weed at?”
(Kidding. I don’t smoke weed, but my mind does often sound like a stoner party. I blame my frequent munchies on it.)
I don’t have a conclusion to this chapter of my business yet, so it’d be cool if some of you who have done this could offer your experiences. Because there’s a lot more to be said about this that I simply don’t have experience enough to share.
I hereby wish myself good luck. Good luck, Johnny.
(Naomi’s Note: Johnny wasn’t going to include this paragraph but I told him he wouldn’t be worthy of calling himself my protege if he did not. Then we got into a fist fight and I’m just writing it myself. If, for some ungodly reason, you want to send Johnny some money, December is the last month to hire him at his current rates. If you’d like to work with him on anything (maybe building a blog or website, or maybe his surprisingly popular consulting which has some new raving fans), now would be a good time. Just drop him a line at johnny@johnnybtruant.com if you have questions or anything.)
An update for everyone concerning Naomi’s note at the bottom:
1. Yes, indeed, moneymoneymoneymoney.
2. Remember that thing I did way back at the beginning of “The Johnny Project” here on IttyBiz where I set up blogs for free? Well, I’m doing it again right now. Hey, Naomi… would you mind adding it to your note at the end?
Details! http://johnnybtruant.com/the-basic-blog-install/
Your seven-step progression “flowchart” sounds just right for the timid – I’m going to point to it the next time someone asks me for advice on this . I’m glad business is going so well for you (and Naomi). You’ve both been major influences in my thinking about the kind of work I want to do, and who I want do do it with, and it’s making serious changes in the way I work.
I launched my new site this week, and just finished a post that will go up later today that mentioned your special on free blogs. The site’s pretty shiny new and won’t pull you much traffic for now, but I’ll certainly point folks to both you and Naomi whenever possible. I consider myself in an adjacent niche, not a competitor.
Thanks for being such a candid role model!
Yeah, high five!!!
This all sounds eerily familiar. I am going through the same process now myself. I haven’t raised my rates in 2 years, but am doing it (finally!) in January.
Same as you though. I’d like to have time for other things besides work, like reading, walking, going grocery shopping, brushing my teeth…
Your blog setup deal rocks, by the way. Even not free, that’s a steal.
I was talked into raising my prices by James at Men with Pens, and I ended up with more clients, go figure. LOL. People assign more value to higher priced products, they percieve that they’ll get more out of the product if they spend more.
Last year I was at a lunch where the current President of the ICF Australasia was speaking, and someone asked her about how much to charge. Her answer was “As much as the market will pay and as much as you can say out loud without choking”.
Raising prices is an interesting topic. I had a client who sells a physical product and she hasn’t raised her prices in years. Her costs have increased to the point where she was originally making around $7 per item and now she’s making around $2 profit. And she doesn’t want to raise prices…..
I wish pricing wasn’t such a pain in the ass. I’m getting ready to add some services to my website and I’m working with a coachy sort of person…she was absolutely horrified at the original prices I’d come up with. It was such a hard thing for me to get over – I didn’t think other peoples’ services were overpriced, and I totally understood that this isn’t something I’d be doing 8-10 hrs a day for 5 days a week, so prices NEED to be higher….but somehow I couldn’t get any of that to translate to me. I got over it, but like I said – pain in the ass.
Anyways, Johnny, it’s awesome that you’re doing so well, and raising prices definitely sounds like a good idea! Before too long, you’d start neglecting personal hygiene, and then you’d never be able to post on IttyBiz again because we’d all be terrified by the ungodly stink.
You raise some good points. Here’s some random musings:
1. Existing customers don’t appreciate it when you raise the prices on them. They are used to paying a certain price, and have an emotional reaction when that price changes.
2. It’s important to keep in mind the value of the job to you. If you would do it for free, and you have time, does it make sense to raise the price?
3. Raise prices (or ignore) all the customers that are a pain and cause problems. What a better way to get rid of annoying customers than by raising prices on them?
4. Sometimes it’s good to raise prices on new customers, and keep existing (and well-liked) customers at the same rate. You can always raise their prices later!
5. It’s important to have a limited and fixed number of hours for the jobs. If there is too much work for the limited hours, then it’s time to raise prices.
6. Never be afraid to raise prices. The money that people pay you is a measure of how much they value you. If they are willing to pay $500 for a job, but not $1,000, then they do not value the service at $1,000. Sometimes we feel like it is not fair to charge twice (or whatever) what we used to charge, but if we create that much value, then it is fair to charge that much.
7. As we create more value for our customers, our prices should naturally go up. More value means more money. It’s not good or bad. It’s the way the market works. A BMW costs more than a Honda. It’s not because the BMW is intrinsically better (although many will disagree!), but that people value the BMW more.
8. High prices create perceived value. When a customer pays a certain price, they begin to convince themselves that the service or product has high value. This in turn makes you have higher perceived value, and allows you to charge higher prices. It’s a virtuous circle.
I’m just now setting prices, but I fought a similar battle in my head time and again. “do I REALLY charge that much for a framed print? REALLY???” I did a bit of research on what other photographers are charging, and I decided I’m appropriately priced. A year from now, we’ll see!
Well, not that I got a working Ittybiz or something, but I once had a guy asking me about a translation job, and I really did NOT want to do it. It was worth about a hundred euros, and I needed money, but I just wasn’t into translating these boring contracts. So I told him it would cost 300 bucks. He said ok, right away. I did the job, and it didn’t feel so bad after all. For sure, not the worst thing to do…
On the other hand, I got far too few clients to do this regularly. (Actually, I don’t want more, as translations are fine from time to time, but not good as an every day job.)
This all sounds so familiar. :) I did this, and wrote about it here:
http://www.erica.biz/2009/the-end-of-an-era/
It’s under the heading “I Choose Hell.”
Soon after that, I sold my business for $1.1 million. Oh, and 95% of my customers stayed. So yeah, it works. And it’s important to do it now, before you drive yourself and your ittybiz into bankruptcy!
-Erica
I had an issue in setting prices with a client for an ongoing writing project. After doing my research, I found they were generally low balling me for the work I was going to do (copywriting) for the industry they’re in. Because I still am fairly new to the field, I was willing to accept a lower price than I had originally asked for. However, I wonder what will happen later on in my career when I can’t or shouldn’t do this anymore. It’s easy to get jobs when you’re willing to take what’s offered, but I am not sure if there will come a time when I can double my price for clients. I also get nervous when I charge too much, I prefer to be valued less and then exceed expectations with my work, then fail to meet or exceed expectations since I charged a lot. But maybe I will have to get over that.
Sorry, Naomi – love your attitude, but you lost me on this one. Probably should have nabbed your course when you put it on sale, but didn’t catch the announcements in time. IMO, prices need to sync not only with what the market will handle, but also with your goals & values. Businesses “without marketing departments” typically don’t have a lot of other resources either. Doubling your rates every time you get busy will quickly price yourself out of the range of those you originally wanted to reach. Beware of the money trap or you’ll appear like so many others out there – and it’ll take more than wit and swear words to differentiate yourself.
I love this.
The thing is, if you care about Your Thing and you work passionately on it and you’re up late studying how to do it better and you’re working umpty hours a day doing it, you get a lot better at it.
You’ll also get an ulcer, shingles, swine flu, the staggers, and your dog will file for divorce.
I very occasionally see people who *aren’t* that passionate, *aren’t* that committed, but they’ve pumped themselves up or they have a guru who’s ragging on them, and they double their rates “because I deserve it and that’s my vision.”
And I’ve then seen those people hit the wall pretty ugly.
But if you’re committed to giving tremendous value, it works. Like some kind of weird magic.
Unfortunately, the people who should do it are scared to death to do it, and the people who shouldn’t do it have perfect confidence.
Hi Naomi,
I’m fairly new to IttyBiz. I really have enjoyed your posts so far. I think what’s interesting is that it’s only been one year since you started, but you stuck with it and pushed to get there and it seems like your persistent paid off. I’m gonna have to spend some time and go through your earlier work to see how you got from your start to where you are today.
Hi.
This will be self regulating, you know. ‘Double your prices’ for new customers…these are simply now your prices…Still interested?
Existing customers? Well, they are your golden eggs. However, not increasing prices at all for them is muddying the waters, I think. I’ve used a sliding increase giving them a chance to catch up to current prices but in a manner they can handle…25% quarterly? whatever…when new contract or new product is brought onstream they buy in, or not, at new prices. It works out.
We’re talking business and business growth…Fair exchange…’Double your prices’ isn’t simply one-sided. This gives customers a chance to ponder their own value of their business, of their role in that business. How empowering.
What if price increases are actually good way for vendor AND customer? Both get to appraise their business situation?
My take is that in business as in life, you can choose to see yourself as the victim or the boss of your own situation.
It’s so incredibly awesome that I now get to write AS Naomi. I’m going to start insulting celebrities on her behalf.
(To new readers… this post is part of a series written by me, as Naomi’s “project.” She didn’t write this one.)
We claim responsibility. We made a very un-ninja-like mistake. We go now to seek ninja penance.
Bad ninjas.
Dude, I’m having a Storm Trooper sort of moment (before they went bad, which was before they were good – that Star Wars series still has me all backassward).
Nonetheless, *just* had this “price raising” moment – where I decided to *grow* (as the coaches say). I wondered “have I reached *that* point in my head where the gansta’ hamsta’s have actually beat down the ninja hamsters, and I am now, officially, crazy?”
Don’t stink so…
It feels, after doing my homework and due moral-spiritual-ethical diligence, honest. It is an act of honesty now-at-this-time to increase price. And what am I if I am not honest with the people I intend to help? I value what they bring to the table (and need), and so, may they, all those prospective *right* peeps, value what I bring to the table (and need). Honestly. (Props to Mark at Heart of Business and love the “fair exchange” piece that Dawn mentions above.)
So, thank you, thank you, thank you for sharing about putting on your big boy pants. This is not an act taken lightly and all whilly nilly. I respect that. And as a fellow neophyte: up high, down low – its value, baby, value. And best wishes to you. And do tell how this goes – party recap at close of second quarter?
(And I will share your post with the other person who pays for bills and likes a well stocked pantry around the homestead… it’ll help his nervous-in-suburbia, yes-I-married-her ‘tude.)
I usually raise my prices every year, exactly like you’re doing it. Brings in extra business before the deadline, which is always nice.
Here’s the thing about raising prices: you always fear you’re going to lose business, but you always get more. I think it’s like a law of the universe, or something.
You don’t necessarily price yourself out of the market, you upgrade to a better market. Besides, cheap customers are the worst ones to work with (can I get an amen?).
AMEN!
AMEN!
I, too, was shocked when my business coach first advised me to raise my prices. At that point, I was overbooked and turning clients away.
I took the chance and raised my rates by maybe 25% and, like Melinda (WAHM Biz Builder), I actually ended up with even more clients!
However, I’ve also had a previous client not hire me for a new project because she found a copywriter who charged less.
So my point is, when you raise your rates (and you definitely should, every few months or so), then chances are you’ll outgrow some of your existing clients. AND THAT’S OK.
Go find new ones. The ones with deep enough pockets who appreciate your true value. And make sure you’re worth what you charge, for heaven’s sake.
I’m re-launching my biz in January and raising my rates by 84%. We’ll see what happens. I hope I don’t end up eating my words.
All the best to you, Johnny!
Lexi
Here are two strategies for raising prices:
1. Print out a hard copy of your price list, even if it’s just one item that states “Consulting fee – $xxx.xx per hour”. There is something permanent about that physical price list that makes it official. Just like a menu at a restaurant.
2. Establish your new fee/price and walk around all day saying out loud, “My fee is $xxx.xx per hour”, “My fee is $xxx.xx per hour”, “My fee is $xxx.xx per hour”. Now when someone asks what your fee is, your conditioned response pops out and says, “My fee is $xxx.xx per hour”. If there is any hesitation in your delivery, the customer will pick up on it. When I hear, “well, my usual price is X but on some weekdays it Y, and….and…what were you thinking of paying?” I know I’m dealing with someone who is insecure about their value and really needs the business.
Johnny,
You go, boy. If you haven’t learned enough in your Year of Living Naomishly to be worth more than you were at the beginning, I’d be shocked. Enjoy a little free time and a bit less worry.
Blythe,
Could be true. But a lot of folks take the customers they can get in the beginning, and find they aren’t working with “those they wanted to reach,” but with “those who saw them as an overqualified, underconfident bargain.”
Once customers have you over that barrel it gets awfully hard to stand up straight and demonstrate you’re The Expert in your field.
I hadn’t raised my rates in a couple of years, because the small and micro-business owners I work with started telegraphing troubles to me that I did want to continue to help with back in 2007. I could see I would lose touch with those folks, who were in survival mode, and move into a different market if I raised rates at the time.
This year, the telegraph has begun to read “growth mode” for most clients who come to me, and I’ve quietly raised rates for most services twice. With no adverse effects.
On the other hand, I’ve always been priced out of the reach of bargain-hunters, because those folks don’t need or want me, and the feeling is mutual. I want to work with expertise-hunters—clients who’re 100% committed to growth—and I’ve found people can’t commit to growth and bottom-feeding at the same time.
Seems like a perfectly ethical move for Johnny or for Naomi, and more a way to *find* those you originally wanted to reach than a way to price yourself too high for them.
My 2¢. :)
Regards,
Kelly
Kelly – you make some very good points and I think you’ve nailed my problem on the head! I too often find myself working below minimum wage to help out friends. I might be one of those “overqualified, underconfident bargains” you describe. This economy has put a lot of us in a “survival mode” mindset. Maybe it’s time to make a change. I should redefine my “ideal client” as someone who values my expertise enough to pay for it. I think there can be a balance here.
Thank you, Johnny, for getting us going on this interesting discussion.
YES! One thing I’ve definitely learned this year is the need to resist the urge to “take what I can get.” There have been a number of times that I’ve quoted something and someone will say, “That’s too much,” and then I’ll want to cut them a deal so that I can at least get some business out of them. But it’s a mistake. Know your worth, and stick to it.
You were largely reticulated? I think the Matrix has you, Johnny B. Mnemonic.
Whoops. Um, that was supposed to find its way onto the general comment list, not latch on as a specific reply. I pulled a S.S….the sequel is never as good.
Kelly: “expertise hunters” – I love it!
I think I’ll add that to my professional site: If you’re a bargain-hunter, you’re in the wrong place. But if you’re an expertise-hunter, then you’ve found it!
I once doubled my rates overnight. No exceptions for existing clients, either! You know what? For about a week, my list went into a state of shock … and then my schedule went right back to where it was.
My own itty biz just went to $35K in profit for the month of November … believe me, raising rates gets to be really, really fun after a while! :-)
Blessings,
Andrea
Oops, my brilliant reply ended up under Blythe’s because I clicked things funny. Hi Blythe!
I’m still cracking up here over the way Sonia clicked things.
I know the feeling I’ve been going back and forward with that also lately especially I need to go up a little on my shipping prices because everytime I go to the post office to send something off the price is up. I knew I wasn’t charging enough but after the holidays I’m going to really have to do something about that. Yes it’s scary but I’m like this if I want something and I can afford it I don’t mind how much to get it shipped to me I mean within reason. I’ve got to do something either that or go up on the price of my items.
1st of all, way to go. Sounds like 2010 is going to rock for you.
Raising prices is the right thing to do. It’s so strange, when I worked for less, people took advantage, didn’t pay on time and generally just expected our arrangment to be like a “friends and family” deal.
I found out a competitor was charing 2.5 times my rate, got it up front (every time) and charged for cancelled meetings I knew I had to change my approach.
It’s working well. Business is up, referrals are up.I lost a client or 2, but they were the ones who paid late and didn’t really value me.
Here’s to a wonderful 2010!
Johnny,
As someone that has been down this road, you are absolutely, 100% correct. If you are busy to the point where you don’t have time for sleep, raise your rates. You will lose a small percentage of your customers but the increase will more than make up for the loss.
I did a little number crunching (out of morbid curiosity mostly) and I offer you the following insights from my experience:
My first price increase was in Year 2. I increased prices 33%. I lost 3% of my customers, then ended up growing 50% before the year ended.
Next price increase was in Year 3. I increased prices 50% and lost 7% of customers. I regained all the lost business by the end of the year with zero marketing, advertising, blogging, not even a Yellow Pages ad.
By Year 5, I raised prices 50% again. I lost 0% of customers and gained 12% more. I also want to mention that I got VERY picky on clients by this point. This is also the first year I referred out more work than I accepted.
Year 7, price increased 25%. I lost 5% but gained 22% more customers! I doubled staff this year and stopped doing field work.
I cancelled the 2008 increase because of the recession. I did it as a measure of good faith. It ended up being a PR coup. I received personal phone calls of thanks from CEOs. That was cool.
2010 is my 10th anniversary in business. As a special anniversary gift to our loyal clients, I’ve decided to “grandfather in” all existing customers at their current prices. Everyone else pays the new rate. It’s 50% higher.
If you don’t raise your prices, you will never get anywhere.
Raise you rates so they respect you. Trust me, $10,000 per hour consultants started charging $100 per hour at one point too.
A few pointers…
1. Never raise your rates multiple times within 6 months. This just pisses people off.
2. If a really good customer cries loud enough, give them a discount. But don’t let them stay at the original rate! It must go up. (FYI a good customer is a joy to work with, pays on time and never argues over the bill – if they cry it’s for a reason.)
3. New customers always pay maximum rate. Always, always, always. No discounts. Nada. Never. Screw them.
4. If you don’t raise your rates, you WILL go out of business.
Congrats and enjoy your newly earned money. If you are really as busy as you say, then it’s time to raise your rates. You are leaving money on the table and that is bad business.
-Lou RG
Eliminate tech costs — NearlyFreeIT.com
This is all good stuff. Thanks Louis and everyone who’s offered their two cents. It’s sounding like I’m doing the right thing.
The news you have given will not please the customers. I think when you rise price level you should consider your customer what they will think and how this increase in price level will effect your customer.
Clara, how the customers feel is certainly part of the consideration re pricing. However you can’t keep your prices the same just so the customers are happy. There’s a lot more to pricing than that.
That’s why a lot of people will raise thier prices for new customers, and keep old customers on the old rate for a time.
Thanks for replying me I think you are thinking only about an organization and not for the customer. If customer feels that your price level is beyond their reach then they will find substitutes with lesser price. Whenever you increase price you should increase the level of quality to gain more customer. But I have noticed that whenever prices increase quality remains the same. I have visited consumerelectronicsdir.com which is an electronic site, they have also increases their price level but quality remain same. So I think organization should think about customers as well as earning profit.
I’m a consultant and going through the same experience, so I found the article very interesting, but I have a question:
Why Naomi is encouraging people to hire Johnny in December at his current rates? If one is currently overbooked, I don’t see why add more workload at this point. I’m now starting to book consulting assignments for 2010, already in the new price (an increase of 25%, as my current rate of $80 per hour is not too bad, especially for my type of work, which requires 120 hours or more in each project).
I would suggest that Johnny followed his own advice: “give yourself some breathing room. If you’re that booked, you’re in significant demand. And if you’re that booked, you can (and should) raise your rates. True, you’ll lose some jobs. But you won’t lose enough to offset the gain you make from the higher prices you’re commanding from the clients who stay with you.” AND you will have more leisure time!
Thanks Chris for giving such a nice comments. I think that your work is different from wholesale and related products. You are giving services not physical products. The services you are giving are not necessities, so you may think rise in price level. But if an organization is thinking about rise in price he should consider consumer as well.
But Clara, the thing is that Johnny IS giving greater value now. He’s got more experience and knowledge and has proven that he can help his clients more than when he set his original rates. So he’s quite justified in raising his prices.
Even if you’re selling physical products then you need to raise prices at times. And sometimes Service products are essential. A lot of clothing aren’t necesseties, yet people still buy them.
Even with Services, if people can’t afford you then they can shop around and will generally find someone for a lower price, and also lower value. If Johnny suddenly discovers that he’s got no customers then he’ll know he raised his prices too much.
Whether you’re selling physical products or services, the customer is only part of the equation when considering pricing.
nice information for the costumer as it will be beneficial for them in long run. but let me tel you if you increase your product prices them it is clear chances that you will loose some of your genion costumers.
Yes, Melinda, we are on the same page on this. We all have to make choices, and if we can earn the same or more servicing less customers, some customers may have to find another provider anyway (either because they can’t pay the new fee, or because we have reached the maximum volume of work we are willing to provide so we can keep our quality of life).
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The thing that I found from my corporate business (as opposed to my new bloggy ittybiz) was that when I raised my fees, I moved from being in the higher ‘more expensive’ part of the cheap band, to right in the middle of the higher priced ones.
So, I suppose I’m saying is that the price becomes part of your ethos, puts you in a particular bracket in terms of what people *expect* of you.
Then there’s the thing about how much value people allow themselves to get from your service.
So there’s a whole lot of perception stuff to handle too.
Totally worth it, I reckon.
Crap.
I’ve just started properly reading the comments from the bottom up.
I think I’ve just done a lame re-stating of what’s already been said.
Ah, well. Not the first time.
Well curiosity about the reticulated Johnny got me reading. After all Johnny is the source of many a wise retort or comeback so I figured this should be good. That was little Johnny you say?
By the time I got to “Dude, where’s the weed at?” I knew this dude was rockin’. I too often need to lean on someone to get the courage to raise prices and then I usually realize that I’m right there in the middle of the pack. Nothing scary about it. Interestingly you may find that you have started a trend.
Finally, someone appreciates the doper humor.
Thanks Melinda to reply my comments. I think you are right and people are willing to buy those things also which are not necessary. But one thing I want to tell you that before setting prices you should consider your potential customers because if you increase price level then there will be a great chance that you will loose your valuable customer.
When I raised my writing prices, I was SO nervous. And very, very surprised to have even more clients than ever before. Recently, I raised them again and had a client complain very loudly, so I told him that I would honor my old prices for a month and after that he had to pay the new one . . . he felt that he was getting a deal and I kept the client.
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