3 Things You Must Do When Planning Price Increases

In this episode of Live with The Pricing Lady, we take a look at

three things people forget to do when they're adjusting, especially

when they're raising their prices.

Sit back, relax and enjoy the episode.

Hello, and welcome to live with The Pricing Lady, The Podcast.

I'm Janene, your hostess.

The show is all about helping you build a stronger, more profitable business.

We talk about the tactics and strategies of pricing and how you can apply them

so that you build your competence and your confidence in pricing.

Welcome to this episode today, we're going to be talking about

three things people forget to do when they're raising their prices.

I love the topic of raising prices.

Not because I like to raise prices, but because I know how

powerful it is for businesses.

And as we're coming up to the end of the year here, I know you are

thinking about what should I do with my prices because it's natural, right?

We're going into a new fiscal year and we're looking at what

we're going to do in 2024.

When people think about raising their prices.

There's a lot of fear involved.

Recently I wrote an article on LinkedIn.

I'll put it in the show notes about being trapped under the Boulder of inaction.

That's what I call it.

The Boulder of Pricing Inaction.

You have these thoughts that all your customers will leave or that

people will think you're greedy or that it's really hard to do.

And all of these are myths.

They're mindset oriented, things that are going on that keep you stuck

and from taking action, even when you know you should take action.

What we're going to do today is we're going to take a look at some

of the things that people forget they can do, or they should do when

they go about raising their prices.

I'll caveat this by saying that while we're talking about it, in the context

of increasing prices, this also applies if you're going to be lowering your

prices and yes, sometimes businesses do.

Choose to drop their list prices.

I would say it happens less often than raising, but it can, in some

cases be an effective thing to do.

The tips that are talking about today apply in that context as well.

So let's take a look at the three things people forget to

do when raising their prices.

Probably the biggest thing that people don't look at or they forget

to do is they don't differentiate.

And this is a big thing.

Here here's what I mean by differentiate.

Most small business owners or young businesses, when they decide

to increase their prices, they'll increase everything the same.

We'll say, yep.

We're going to raise our prices 15% and they raised everything by 15%.

What's the problem with this?

Well, first the problem is, is it's not a very sophisticated strategy.

Sure.

It's quick and easy.

You can do it in one fell swoop.

But the problem is that you have some things in your offer, some

products or some services or software solutions that you offer.

That are probably already well-positioned and it would be difficult for

the market to take an increase on them or a big increase on them.

And you have other things in your offer, maybe like your little offers or

your, your upsells or downsales right.

That people are less price sensitive on.

And so there's an opportunity there to raise the price on those things a little

bit more than maybe your main offer.

If you don't think about differentiating, then you run the risk of raising

the price on things where people aren't willing to pay more for it.

And of not taking advantage of where they would be willing to pay more for it.

You see that by doing just a flat price increase on cross

everything you actually risk.

Making changes that could be hurtful or harmful to your business.

And, you know, when people think about raising prices and they have this vision

of all their customers running away.

If you're not differentiating, then you're actually increasing

the chances that that could happen.

So this is one way that you can mitigate that risk is by.

Raising the prices in the right.

You know, for the right offers in the right way.

Now the second thing that people forget to do, or actually, I'm not sure they forget.

I think they just don't want to do it, is the math.

You know, if you follow me, I'm a big stickler for doing the math.

Anytime you're going to do anything with your pricing, you want to

take a quick look at the math.

Never fear.

If you're not big on math, I've got some tools that can help you.

And we'll put the link to my pricing toolkit in the show notes.

Why is the math so important?

Well, when you're adjusting your prices, you're adjusting

your revenue and your profit.

Most people think so we're going to talk discounts for a moment.

Most people think when they offer discounts that automatically

more people will buy.

So they will make more money.

But what they don't realize is that they have to sell a lot more at that lower

price in order to make the same amount.

Conversely, when people are raising their prices, they fear

all of their customers running.

But when you raise your prices, generally you can afford to lose a few customers

and still make the same amount of money.

Of course, you have to do the math in both cases in order to understand

if that's true for your business.

That is why I don't want you to forget to do the math.

Please, please, please do the math.

And like I said, you can get access to my pricing toolkit online.

It is complimentary toolkit and in there, especially two tools will help you.

There's one called the discount calculator.

I think.

Yup.

I'm drawing a blank here, but we'll, you'll see it when you get into it.

And that one will help you understand if I lower my price by this much,

how much more volume I need in order to hit, you know, this other level.

And then you have the profit impact calculator.

Which will help you look at your business overall.

So then it includes things like the volume and the cost of your business.

Those two very simple tools can help you do the math around.

The price changes that you're looking at doing.

And I have to share with you this because it always amazes

me the reaction people have.

So when I work with clients one to one and in the group programs for

raising prices and setting prices.

We have tools in those (my) programs that help people do that math more

sophisticated than the ones in the toolkit that I just shared with you.

Every time when somebody uses these tools, they have this massive

big light bulb come on their head.

They feel, and they have so much more insight and knowledge into

what's happening in their business and how those decisions that they're

making around what to do with their pricing impacts their profitability.

It gives them so much confidence.

So this is again why it's also very important to do the math, because it

helps you feel more confident about the decisions that you're making.

It also allows you to mitigate any downsides of that.

So the last reason are the less actually, it's not a reason.

The last thing that people forget to do when adjusting their prices

is look at whether or not they actually need to make a communication.

And you might think Janene, what are you talking about?

Shouldn't I always communicate with my customers.

Well, in fact, it really depends on your business.

If your business is always new customers coming around.

Then there's less reason to be making big pricing announcements

about changes in whatever.

Now if your customers are repeat buyers, or if there's, you know,

a lot of price transparency for you, then of course, you're going

to want to make a communication.

But it's not the case that just because you're raising prices, you have to

actually make a big communication.

It really depends on the business.

And for example, let's say your, a service provider and you provide

services, but it's not like a repeat service that you provide to your clients.

It's something you usually do once and then go away.

Well then there's no real reason.

To make a big announcement about that because you're always bringing

new customers in and either they're going to be willing to

pay for your new price or not.

Right.

So it's not, there's that level that necessity to communicate your price

changes is not as obvious, let's say as it would be, if you were in a

business where you have lots of repeat customers, because then you really.

You know, the relationship with them is different.

And in order to maintain that trust with them, you would want to have

that conversation because that's going to impact their business or their

personal budgeting for the next year.

So those are the three things I wanted to focus on today that

people forget to do when they're adjusting or raising their prices.

So from now on, when you're thinking about adjusting your raising your

prices, you are going to think about how to differentiate what you're doing

amongst different parts of your offer.

Second, you are going to do the math.

And I don't know if you've heard me say this before, but when I was a teenager and

taking piano lessons, my teacher used to threaten me when I didn't practice enough

with a thousand lashes with a wet noodle.

So.

If you do not do the math, that is the consequence.

Okay.

I'm just kidding, but you know what I mean?

And you're going to think about what communication is really necessary.

Yeah, it could be also that you do different communications for different

customers, but have a think about what's really necessary and what actually

suits your business and your customers.

That is what I wanted to share with you today.

We have got next year, so many great things coming up for you.

We're going to be restructuring the podcast a little bit, and I'll share more

about that with you in early January.

But I wanted to wish you a very happy holiday for you

and your family and friends.

I wish you all the best in the season.

And of course it, enjoy pricing.

I'll see you in 2024.