Raising Prices Almost Always Make You More Money But…

Summary

• Raising prices can almost always make you more money, but you'll hear "no" more often.
• People often fear a 10% or 20% price increase, but I recommend testing 4x or 5x price differences.
• When raising prices, you need the courage to handle more rejections.
• We experienced a 35% reduction in conversion rates but doubled our price, resulting in higher overall revenue.
• For instance, if our cost was $500 and we sold the item for $11,000 with a 50% margin, we made $500 in profit.
• Doubling the price to $22,000, even with a one-third reduction in sales, we made $1,500 in profit per sale.
• Despite selling one-third fewer customers, the profit in absolute amounts doubled.

Video

How To Take Action

Implementation Strategies

For Small Businesses

1. Price Testing: Start by testing price increases of 4x to 5x rather than small increments. Pick a high-demand product and try the new pricing for a short period. Analyze the conversion rates and compare the profits.

2. Courage to Face Rejections: Understand that raising prices will lead to more rejections. Prepare mentally and train your sales team to handle refusals confidently.

3. Profit Calculations: Calculate the current profit margin of your product. Execute a scenario analysis by doubling your price and estimating the impact on sales. Assess if the increased profit per sale compensates for losing some customers.

For Entrepreneurs

1. Bold Pricing Moves: Don't shy away from dramatic price changes. If you have the quality to back it up, your true value should be reflected in your prices. Test large price increases over a set period and monitor carefully.

2. Handling No's: Train yourself and your team to be resilient. Each "no" is closer to a "yes," and the new customers at higher prices will significantly boost revenue.

3. Revenue Analysis: Track your revenue before and after the price increase. Calculate not only the topline revenue but also the incremental profit per sale to understand the overall impact.

For Personal Growth

1. Value Your Time and Skills: If you're a freelancer or provide a service, don't undervalue yourself. Test higher charging rates and see if your client base still finds the value worth paying for.

2. Strength in Rejections: Build resilience. Higher prices may mean fewer clients, but it also means higher-quality engagements. Use rejection as a learning tool to refine your offering and pitch.

3. Measuring Success: Regularly assess how pricing changes affect your overall income and client interactions. Focus on the increased value you offer and adjust your pricing strategy accordingly.

Remember, the key lies in having the courage to experiment with prices and the resilience to deal with varying outcomes.