Some time ago, a friend called me to ask how much she should charge for a particular service. I told her a figure that I not only thought was “reasonable” (meaning mid-range) but also knew from experience was pretty common. She got angry at me, spluttering that “I could never charge that!”
This has happened before.
Everyone has money baggage – along with relationship baggage, God baggage, and politics baggage. All the most interesting subjects of life, which don’t make for polite dinner conversation, usher in personal baggage because they’re hugely influential.
Money baggage is a key topic that all business owners need to be aware of, because it’s hugely influential on your earning capacity.
Small business earnings money baggage
Money baggage comes from our parents and extended family, our friends, colleagues and industry in which we operate. Money baggage is the sum total of all these different influences and is likely to be unconscious until you bring it to light, for clear-headed, wide-eyed examination.
I can’t emphasise enough how important this is for business owners to do.
Typically, we encounter our own money baggage when we’re setting our prices or raising our prices. I often see business coaching clients for the first time when they’re wanting to raise their prices or introduce new premium products or services.
Small business earnings: changing your norm
For the sake of this article, let’s assume you’ve been in business for a while. Let’s say you’ve got 10-20 years’ experience in your industry and have at least 5 years experience in self-employment. For the sake of this article, let’s assume you’re good at what you do, but not so great at marketing, and self-promotion makes you squirm.
You’re thinking about raising your prices. But your colleagues all operate within a certain price range. It feels safe in the middle, where you can easily point out to prospects that your fees might not be the cheapest, but they’re pretty standard.
The problem with this picture is that the standard you’re measuring your pricing against is outside of your control. And you have no way of knowing what factors have determined how your competitors set their prices, but it’s likely got little to do with rational comparisons and far more to do with their competitors.
So your prices have been set by your competitors’ competitors, and their prices have been set by their competitors’ competitors.
Doesn’t make much sense, does it?
There are two options: you can reset the standard by changing the typical approach to how things are done to make them as utterly fantastic as possible; or, you can change your company and find a new group of colleagues to whom your increased prices look not only normal, but perhaps even cheap.
Setting a new standard
Setting a new standard is not about marketing hype. It’s about completely changing your approach to how you do what you do. It’s about being truly trail-blazing. It’s about setting new standards for others to follow.
Marketing and public relations will be pivotal to this – if you’re truly one-of-kind, you’ll need to educate the market on how you differ and why you’ve taken this renegade approach. And you’ll have to explain this over and over again, in a public education campaign.
Change your company
The second approach is to seek out others in your industry who are charging the kinds of prices you’d like to charge. Introduce yourself, get to know your new community and check out how they explain and position their value.
If you are ready to move up a level, you need new people who have new ways of doing things. Willpower has been shown to be contagious because humans are hardwired to connect – we mimic and mirror willpower successes as well as willpower failures in our social network.
I’m not suggesting that people or businesses that operate in the low-end or mid-range portion of the market lack willpower – not at all. Oftentimes, these people work far, far harder than they need to.
If you don’t want to work so hard and you want to make more money, you need to adapt new habits, new ways of viewing things and doing things.
You need a new normal to adapt to. And that doesn’t happen by staying where we are, with the same company.
You are the sum total of the company you keep. Be careful about adopting others’ money baggage – it could be your most costly mistake.
Check-list to raising your business prices
- Give your community a heads-up.
It’s well worth taking the time to let your clients and extended community know that you’re raising your price, and when.
- Explain, don’t apologise.
Raising your prices is never something you need apologise for.
- Invest in your business.
Moving from low-end to mid-range, or mid-range to high-end, needs a commensurate investment in your business – your branding, website and marketing materials, as well as equipment, and possibly some new staff or staff training as well.
- Communicate your value.
Why should people invest with you? What main benefits will they receive from your product or service? What likely outcomes will those benefits usher in? Investing in a good copy writer will bring an excellent return. Spend the time, effort and money to communicate your business value.
- Highlight your case studies and testimonials.
You are only as good as others say you are, so ensure that you survey as many clients as possible, and streamline this. Narrow in on the best client experiences and study these, not only to showcase as case studies, but to emulate and continue to improve.