September 15, 2018
Charge more and feel younger
By Warren Patterson
“The more I charge, the better I feel.
The better I feel , the younger I look.
Charge more. Look younger.”
Following this mantra, Ed Hansen, owner of Hansen Lawn & Garden in Ottawa, went home and raised all of his prices. The next day, Ed took a selfie. I have seen Ed’s before and after selfies, and believe me, he is looking much younger these days!
All joking aside, this is a serious matter. So many LO members agree that now is the time to raise prices. But how can we go about raising our prices if we don’t know what the market will bear? And you don’t have to wait until to next year to make it happen. Profits are time based. So the decisions you make today will help you tomorrow.
The perfect pricing
There is a great three-step formula you can follow to nail down the perfect pricing level that will maximize your profits, keep customers happy, and forces you and your team to focus on creating massive value for your products and/or services:
1. 10 next customers
2. Five per cent price increase
3. 20 per cent pushback
These three steps all build on top of each other to produce the coveted 10-5-20 rule. For the next 10 customers you talk to, raise the prices by five percent. If you get less than 20 per cent pushback, then congratulations, you now have your new base price. Keep repeating this process until the pushback exceeds 20 per cent.
Without any pushback on your prices, you’re leaving profits on the table and making it difficult to grow your business.
Play it cool
For some, it may take a bit of time to get used to customers readily accepting your new pricing. It can seem like Christmas, but please, whatever you do, don’t kill the vibe by acting surprised when they agree to your pricing. Play it cool when they say “yes.”
The key here is to test the upper limit of what your particular market is willing to pay for your brand, service, knowledge, staff and product. Keep testing your market until you find that line of resistance.
I’m sure just the thought of implementing this formula into your business may come with a whole set of emotions (anxiety, suspense, fear, etc.), but do what you need to in order to stick it out. You owe it to your staff, yourself and your bottom line to make the most of the talent, skill and countless hours you all put into the job. Remember the saying: “The more I change, the better I feel. The better I feel, the younger I look. Change more. Look younger.”
Warren Patterson may be reached at firstname.lastname@example.org.