Just. Raise. Your. Price.

Summary

• Many of you are pricing your services too low. I looked at a construction firm last quarter, and they had thin margins.
• I advised them to raise their prices by 10%. After doing so, they doubled their profit while maintaining the same conversion rate.
• When they asked what to do next, I suggested raising prices by 20%. Although they were nervous, I also recommended giving a guarantee for on-time and on-budget completion, with a 20% refund if they fail.
• The worst-case scenario is remaining in the same position, while the best-case scenario is closing 9 out of 10 deals.
• The key takeaway is that it doesn’t matter what you think about the price. It only matters what your customers are willing to pay.

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How To Take Action

A good way to start is by evaluating your current pricing. If you're offering a service, consider raising your prices by 10%. For example, if you’re a construction firm with thin margins, this small adjustment can have a significant impact on profits, just like it did for a construction client who doubled their profit with a 10% price hike. This approach works for any small business or service where margins are slim.

Next, observe the results. If your conversion rate stays the same, this means your customers are still willing to pay the higher price, which is great! At this point, you might feel cautious about further increases, but try pushing the envelope a bit more. Consider raising prices by another 10% or even 20%. To ease your customers' worries, offer a strong guarantee. If you’re in construction, maybe guarantee on-time and on-budget completion with a 20% refund if you fail to meet these terms.

Listen, the worst that can happen is you stay in the same spot you are now. But the best case? You could close more deals and significantly increase your profits. People will pay for value if they believe they are getting the worth of their money.

Remember, it's not about what you think your service is worth. It's about what your customers are willing to pay. Use this approach to adjust your pricing strategy, and you’ll see tangible improvements without a massive investment of time or money.

Now, take these steps and reassess periodically. Ensure that price hikes are aligned with the market's willingness to pay and continue to deliver high value. Stay confident in the value you provide and communicate it clearly to your customers.