Putting up prices
Discussion
Bit of advice needed folks on how to increase prices withoyut losing or upsetting customers:
For the past 4 years I have been selling my services in a number of ways, including as a specialist trainer. Recently I had to contact one of my competitors to buy in a days training for my staff in an area where they have particular a specialism, similar to the area where I specialise. I was gob smacked: they were charging 3 times what I was charging and the clients were paying it ( I wouldn't say happily!). Ok, so they are a bigger company with larger overheads (like swanky offices) but it got me thinking that I may be under pricing my time. I am always busy and clients don't blink when I give them prices, except to ask if the cost is per course or per delegate. Perhaps should have alerted me to the fact that I was under priced.
I set my day rates about 3 years ago based upon what I had seen when I was buying in consultancy days in the public sector, and increased them slightly by 6% last year. I sell other services and have notified clients of a rise in April 2007 because I know they work on long planning cycles.
I would dearly love to increase prices to around half of what my competitors charge , but that will look like a 50% increase to clients who have already used me. I am content to loe some clients if need be to work less for the same returns.
Any advice on how to go about doing that?
Offer a new product which is slightly different (but better) than the old; tag it with the price you want to achieve.
Offer it parallel to the original product, and then let the old one slowly discontinue.
Alternatively, change the way you charge for your efforts, so that it is not too easy to compare old a new prices.
Offer it parallel to the original product, and then let the old one slowly discontinue.
Alternatively, change the way you charge for your efforts, so that it is not too easy to compare old a new prices.
Bodo said:
Offer a new product which is slightly different (but better) than the old; tag it with the price you want to achieve.
Offer it parallel to the original product, and then let the old one slowly discontinue.
Alternatively, change the way you charge for your efforts, so that it is not too easy to compare old a new prices.
Offer it parallel to the original product, and then let the old one slowly discontinue.
Alternatively, change the way you charge for your efforts, so that it is not too easy to compare old a new prices.
The product isn't changing but I will have a chance shortly with a new customer group, so they start from the position of paying the new rate. Existing customers have been paying one rate for a particular training course for a few years, and will I am sure notice if I up rates. It may be that I could tie the rate to the existing HR manager who commissions the work, as they move on quite regularly and I guess don't tell the new manager what they paid for that odd days training 9 months ago in the handover, the increase wouldn't be noticed. Complicates pricing a bit, but do-able.
I made the mistake of setting a single day rate based upon what I charged central Govt. depts. when they bought 200 days from me working from home, not what I should charge for a single day of training where I have 5 hours of travelling to and from the venue with an overnight stay. I could start to charge for travel time (I know one competitor who allows 90 mins. travelling and then charges per 15 mins at the day rate) or a standard overnight charge of say £70 ( I now simply charge was it costs me to stay and stay local B and B/ Travelodge). Perhspa I have been too kind!
Yeah, what he said. Find some additional added value, that you're not currently offering. I'll tell you what, increasing prices is the easiest and quickest way of improving your bottom line. It requires nerve, but here's what we do.
We accurately measure our enquiry - order percentage;
We keep increasing our prices until the percentage begins to drop - and then we raise them once more.
As mentioned, it requires nerve but you won't regret it.
On a related subject, a while ago I attended a seminar entitled 'not conceeding price'. I managed to attend for half price by negotiatiing hard!!
We accurately measure our enquiry - order percentage;
We keep increasing our prices until the percentage begins to drop - and then we raise them once more.
As mentioned, it requires nerve but you won't regret it.
On a related subject, a while ago I attended a seminar entitled 'not conceeding price'. I managed to attend for half price by negotiatiing hard!!
Are your customers coming to you because you're better in all areas than your competitors? If so, they'll stomach an increase, if they're coming to you solely on price then don't be afraid to lose the odd one ( and invariably they will probabaly be the slow payers as well), your added profits may cover it, and if not find some more at your new prices.
There will ALWAYS be someone cheaper than you,just make sure there's never anyone better than you.
There will ALWAYS be someone cheaper than you,just make sure there's never anyone better than you.
Added value is the way to go, although you could also charge in smaller units.
Say hrs rather than days, charge a fifth of your daily rate per hr and you could easily sneak a 40% rise past the unwitting.
Either that or try to compress your training. Make 2 day courses into a day and a half and you're making a similar rise but it is less obvious.
Say hrs rather than days, charge a fifth of your daily rate per hr and you could easily sneak a 40% rise past the unwitting.
Either that or try to compress your training. Make 2 day courses into a day and a half and you're making a similar rise but it is less obvious.
Several options (some as covered above):
1. Simply increase the rates and see what happens
2. Increase the rates for new clients (and set a 10% PA rate increase ratchet for existing clients)
3. Offer an all-inclusive service at the price that you want to charge, and start removing inclusive items from your existing offering (i.e. start adding travel costs, hotel costs, admin costs, etc)
4. Come up with a totally different pricing model. If it's cut horizontally now, cut it vertically, etc. (if you get what I mean!)
5. Other options as suggested around compressing courses/more fine-grained (higher) charging rates, etc.
1. Simply increase the rates and see what happens
2. Increase the rates for new clients (and set a 10% PA rate increase ratchet for existing clients)
3. Offer an all-inclusive service at the price that you want to charge, and start removing inclusive items from your existing offering (i.e. start adding travel costs, hotel costs, admin costs, etc)
4. Come up with a totally different pricing model. If it's cut horizontally now, cut it vertically, etc. (if you get what I mean!)
5. Other options as suggested around compressing courses/more fine-grained (higher) charging rates, etc.
srebbe64 said:
On a related subject, a while ago I attended a seminar entitled 'not conceeding price'. I managed to attend for half price by negotiatiing hard!!
Excellent! In answer to th eoriginal question. Could you charge the new price to new customers and advise you existing clients how their loyalty has earned them a discount from your current rates. Then gradually up the charges to your existing customers to become closer to your new customers.
groomi said:
srebbe64 said:
On a related subject, a while ago I attended a seminar entitled 'not conceeding price'. I managed to attend for half price by negotiatiing hard!!
Excellent! In answer to th eoriginal question. Could you charge the new price to new customers and advise you existing clients how their loyalty has earned them a discount from your current rates. Then gradually up the charges to your existing customers to become closer to your new customers.
I have done that, but that might be a good idea to extend it. If I have really wanted a certian piece of work because I see it leading to bigger and better things I have lowered prices to be sure I have got it I have shown the discount on the invoice.
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