How do you get to celebrate a 20th company anniversary? Or even a 1-year or 3-year anniversary? You bring dollars in the door. Without revenue, you have no business. Unless you’re a Silicon Valley unicorn that has attracted millions of dollars for an idea, your company expends a lot of effort and energy on bringing dollars in the door every day. Every owner also sets higher revenue goals with each passing year. They hope to get the same buyers to buy more of the same or buy other, higher priced offerings. They invest heavily to attract new buyers.
What they too often Do NOT is raise fees, prices or rates.
You’ve likely thought “I’ll lose my clients or customers.” Or, “I need to be competitive.” So, you stick to the same prices, fees or rates for a long time, or you decide to raise your prices, fees or rates at the start of a new year.
I’ll let one of my clients speak about the results of his quest to raise his firm’s rates:
“We charged by the hour and hardly ever increased our rates out of fear. There are so many attorneys and we worried our clients would go elsewhere. Then we asked Susan to help us increase our hourly rates. She challenged us with the question “What is the value you provide to your clients? And what fee is commensurate with that value?” Since then, we speak with our clients about outcomes from our work, and charge fees commensurate with those outcomes. This means we charge differently for different cases or legal needs; and the more value, the higher the fee.”
Raise your Rates, Fees or Prices Every Time You Increase Value
You know the range of value your company offers. Whether you sell products or services there is value associated with your offerings. If today’s prices are the baseline for the value you’re offering today, make time to determine what new value you can add and what new price, fee or rate would be commensurate with that value.
Be deliberate about adding value to the right offerings in order to raise fees, prices or rates.
Improve and innovate current offerings for quick added value and increased revenue.
Let the GO CURVE Be Your Guide
One key to increasing rates or fees is to have distinct revenue streams. Don’t lump everything you offer together. Identify all your variations, differences and discrete options. Each of them should be priced for the value they deliver.
The GO CURVE segments and aligns your buyers and your offerings/revenue streams into three categories. Testers are first-time buyers, or buyers who only want common offerings. Regulars are repeat buyers, often buy several your products or services and tend to appreciate the increasing differentiation of your Uncommon offerings as they move up the Curve. Your Enthusiastic Fans buy only from you and look for much more value that they’ll willing to pay for.
Plot your current offerings on the GO CURVE, with prices or fees. Then bring your team together to brainstorm ways to add value in order to push offerings up the Curve to the right. The higher they go, the higher the fee or price.
Get Your Buyers Excited about the Value
Marketing primarily is the process by which your company gets buyers excited about what you offer. No matter how tempted you are to extol your features, do not do that!
Demonstrate the value they’ll enjoy from their purchase. The single best way to do this is with stories of other similar, happy buyers. You can see how to do this in these stories.
Use the 4 marketing messages that I’ve written about. With the smart use of Appreciation, Why Stay messages and Create Demand stories, you’ll have buyers eager to spend to achieve their satisfaction goals.
No Profit Even with Higher Fees or Rates?
This is a terrible situation to find yourself in. You’ve raised rates or fees, you have steady revenue but you’re still not making a profit.
There are typically two reasons for this:
1)You did not build your profit into your rates, fees or prices
While you’re building value in your offerings, and talking about value to the buyers, you must be sure that your profit is built in to every rate, fee or price. It cannot be an afterthought. Profit is your company’s well-earned reward for all the risk, investment and effort you make to deliver that value your buyers enjoy.
2) You are lacking confidence about the value of your offerings
I’ve found that lack of confidence is like a silent killer. Confidence erodes bit by bit, often as a result of comparing your company and your offerings to those of others. You hear about all the marketing and branding efforts you’re “supposed” to undertake and feel smaller and smaller.
If you take only one idea away from this newsletter today it is this: talk to your customers and your clients and find out how they feel about your company. They are the ones that count, and hearing from them will boost your confidence, your business and your profit!
Need to talk this over with me? I’d love to schedule a Listening Call. 703-790-1424.