Here are some signs it might be time to raise your prices:
- Your cash flow isn’t flowing
- Your competitors have higher prices and sell more than you
- You notice your customers have become “bargain hunters”
- Your costs for product, staffing or overhead rise
- You haven’t raised prices in years
Whatever the reason you believe it’s time to raise your prices, the challenge is to do so without losing customers. Start by having your accountant help you figure out your costs related to the product or service. Have costs gone up but your price has stayed the same? Don’t just look at the price your competitor is charging but make a list of what else is different about your business. Can you charge a little more and play up your advantage? If the demand for your product or service has suddenly skyrocketed, look into the reasons why and forecast how long the trend will last before deciding to raise prices. Create new packages that raise prices overall, but can be broken back down when demand decreases. Finally, don’t raise prices just to increase cash flow. Make sure you’ve cut costs in every other way possible; then raise prices when the numbers prove it’s time.
Rieva Lesonsky is CEO of GrowBiz Media, a media and custom content company focusing on small business and entrepreneurship. Email Rieva at email@example.com, follow her on Google+ and Twitter.com/Rieva, and visit her website, SmallBizDaily.com, to get the scoop on business trends and sign up for Rieva’s free TrendCast reports.