The Price Rise Trap: 3 Myths Keeping You Stuck

Welcome to Live With The Pricing Lady.

I'm Janene, your hostess.

This show is all about helping you build a sustainably profitable

business while making an unbelievable impact on your world.

Learn from my 20 years of experience and from my guests as we discuss their pricing

challenges, failures, and successes.

Pricing is a way of being or behaving in your business.

My mission is to help you confidently charge for the value you deliver.

Pricing is either hurting or helping your business.

Let's make sure it's helping you reach your dreams

In this episode of Live with The Pricing Lady, I'm talking about the three myths

that keep you from raising your prices.

Sit back, relax, and enjoy the episode.

I'm super excited because today we're talking about one of my favorite

topics, which is raising prices.

Yay.

In fact, we're going to be talking about what stops you from raising your prices.

One of the things that I see all the time, especially with small businesses, with

coaches, consultants, solo entrepreneurs, freelancers, is that you guys get stuck.

There'll be signs everywhere that you should raise your prices and

in your head, you'll be telling yourself it's not possible.

So we're going to take a look at the three myths that hold people back when it comes

to raising their prices the most often.

Let's get started.

Myth number one -is you believe that people will think you are greedy.

If you raise your prices?

Now I see this, especially with you ladies.

Yes.

I hear this quite often from your ladies.

You say, I don't want to be seen as being greedy or you'll say

I don't care about the money.

And you should care about the money.

My friend.

Definitely care about the money.

Money is important when you're running a business, but just because you're raising

prices, it does not make you greedy.

That is a very important statement.

I want you to take to heart.

Just because I raised my prices does not make me greedy.

There's a couple of things here that I want you to remember.

First of all, Don't care so much about what everybody else is thinking.

This is really important.

You need to do what's right for your business for yourself

and for your customers.

Second over the life of your business, you will absolutely 100%.

I can guarantee you will need to increase your prices.

You'll probably need to do so regularly.

It's a really important that you come to terms with that as something you are going

to have to do it to your business and stop making up stories about how people are

going to think I'm greedy in order to deal with the fear that you feel around it.

I'm going to give you some tips later on about what you can do

to help work through that fear.

But first you need to have a real talk with yourself about not letting

these types of statements and fears get in the way, especially

this one around being greedy.

Now, let me be very clear if you are raising your prices because you

want to take advantage of people.

We saw that quite often, during COVID days, certain businesses who are very

unscrupulous, raise their prices in order to take advantage of people.

Of course, this is a big, no, no.

But in the course of a business and the cycle of your business, you

are going to need to raise prices in order to maintain your profits.

Because you bring more value than you did before because the market

prices have increased and you want to at least stay along with that.

For those three reasons alone, you are going to need to raise prices over time

and doing so for those types of reasons.

Absolutely.

Positively does not make you greedy.

It makes you a smart and savvy business owner.

Myth number two.

If I raised by prices, all my customers will run away.

So when I think of this one, it always makes me laugh a little bit.

Because I think of the film kindergarten cop with Arnold Schwartzenegger and

during that film, they have a fire drill at the school and his classroom.

The first time they do the fire drill goes into utter chaos and there's kids

running around and screaming enough.

And running for the door fire drill.

That's what I think of, you know, the myth that you're telling yourself is

that there's going to be this mad dash for the door, from your customers,

just because you raised your prices.

And I can tell you that rarely if ever happens, and especially in the

types of businesses that most of you had the very, very low, if not, no

risk at all of this being the case.

Now, if you were doubling or tripling your prices.

I can see where you might be more concerned about that, but if you're

thinking 10, 20, 30% increases that there's very little risk.

That of course I must caveat.

I don't know anything about your business or where your positioning is now, and

that is relevant, but rarely is it going to lead to a mass outflux of customers?

More importantly, if you go about increasing your prices in the right

way, if you believe in it, if you understand why you're doing it and have

concrete justifications in your own mind as to why it's needed and necessary,

or why it's the right thing to do.

Then you're going to feel more confident and be able to

communicate it more effectively.

And then you're going to be able to mitigate.

Who leaves and that's where this gets really interesting.

So price increases can be an effective way to get rid of some of your most

difficult and lowest paying customers, which can actually be a real advantage.

So just because you raise your prices.

There is a chance.

Some customers will leave, but if you do it right, you can actually

have some control or something or managed to some degree, which ones

of them will leave and make sure it's the ones that you want to see go.

And not the ones that you don't, you can't control that a hundred percent, but you

can actually steer, you know, steer things in a direction that works better for you.

And a lot of times we will use pricing increases in order to weed out the

customers that are difficult or who don't really value what we offer.

So stop thinking that all your customers are going to have for

the door and start thinking about what's the best way I can do this.

Get the additional money or value that I need.

Without disrupting the business, you can take clear steps to be able to do that.

Miss myth.

Number three is it's really hard to do.

So why even bother.

Yeah.

So this is another one and I have to confess that pricing specialists and

experts by itself, we tell people all the time how difficult it is to raise prices.

If you don't position yourself well, at first, it can be very

difficult to do and this true.

It can be more difficult (raising prices) if you're not

positioned properly to begin with.

Or if you wait too long to make the necessary changes.

It can be more difficult.

But it does not make it impossible.

And you telling yourself it's really hard to do.

Is just you avoiding facing doing the work that's needed in order to

feel more confident about doing it?

So these three myths, right?

Being afraid that other people will perceive you as greedy being

afraid that your customers were awfully and just burying your head

in the sand because you think it's too difficult to do are all myths.

And you need to stop accepting.

Those as excuses for not doing what you know needs to be done,

which is raise your prices.

I'm going to talk in a moment about what are the three things that you

can do, so you feel more confident about raising their prices before I

do that, I want to share with you.

I have a new guide available is called the price check guide.

When was the last time you raised your prices?

Do you expect you should.

But aren't clear why you can use this price check guide to understand

if there are signs that tell you your prices need to change.

And really we're talking mostly about price increases, but for some businesses

you may choose, or for some parts of your business, you may choose to lower prices.

And this guide helps walk you through that process.

It's just 15 Franks.

So it's not going to break the bank for you to get it out, check it out.

Out is a really great guy to help you get started, to feel more confident

about the changes you want to make.

You can grab a copy of that guide at The Pricing Lady dot com.

Backslash price dash check bash guide.

I'll also put that in the show notes for you.

So I said, I was going to share with you three things that I think are

the steps that you need in order to have a robust plan for your

price changes to be more effective.

The first step is you gotta do the research and that's where

the price check guide comes in.

If you do the research and you understand what the signs are that make

this (price change) necessary, you're going to feel more confident about it.

Let's pretend for a moment you have a hair salon.

You're a hairdresser.

And you find out, your rent is increasing for your, the salon rental.

The energy costs are going up, power and water have increased.

The consumables that you use, like shampoo and conditioner and hair creams

and treatments and colors, all of that has increased in price as well.

And over the last four years, five years, you've noticed that your competitors have

raised prices, but you've done nothing.

All of those are signs it's time for you to raise your prices.

What I've seen time and time again, is people ignore those

signs because they're afraid.

Because of these stories or these myths that they're telling themselves,

again, the price check guide can help you to do that research.

In that guide, I walk you through how to look at it and analyze the market

and your business so that you can see if there are signs that say, yes, I

need to make a change or no, I don't.

If it's unclear, then you know where to go look.

At, you know, which aspects to look at, to see if there are signs.

So do the research at step number one, understand are there signs

that my prices need to change?

Step number two is to do the math.

Now, I know some of you are going to hate this one cause you don't like math.

But here's why this is so important.

If you're that hairdresser and you came to me and you said, you

know, Janene, my rent is going up.

And I said, okay, And you say, but I just want to raise my prices 10%.

And I say to you, okay.

Is that going to give you the same profit as before less profit or more profit?

And you say, I don't know.

Then you're raising your prices without understanding if you're able

to overcome the costs of your rent increase, with your price increases.

In order to ensure that you are going to be able to be at least as

profitable, if not more profitable, which is usually your goal.

Right.

You need to do the math.

You also need to consider, okay.

With these prices, maybe 5% of my customers might choose to go

somewhere else if I increase.

That means I have less volume.

And you got to see, okay.

What does that mean?

In terms of my profitability?

If I lose 5%, even though I'm charging more.

Will that result in me making less money, the same money or more money.

That's why I say you have to do the math.

Math is really important.

And.

You should always do kind of okay.

If I keep my prices the same.

If I change my prices like this, and maybe you have two different versions

of price changes that you want to do.

Then you can run the scenarios with the two different versions.

Do the math... do the math, do the math.

Do the research, do the math.

And the last one is communicated effectively.

Not all businesses will need to make a price communication.

That is something that you will have to think about

what's right for your business.

Typically businesses where you have repeat customers.

You may want to communicate prices formally or price changes formally

and in businesses where you're not having a lot of repeat customers,

but you're basically selling to new clients or new types of customers.

Then there's often less of a necessity for making a price in communication.

I can't tell you what's right for your business or someone else's

without understanding more about it.

One of the points I want to make is that.

You can have the right price changes, but if you communicate them

poorly, It will not be successful.

It will fail.

A lot of times when we see people, businesses making price changes,

and then you hear it didn't work.

Oftentimes it's because they didn't communicate it well, I recently

got a notification from Canva.

One of my favorite apps ever that my price is basically tripling.

It was a real ouch for me, I thought, oh, wow, triple that's a lot.

Now I love the tool.

And I still think it's a good deal, even though the price is tripling, but I read

through the price communication, and it was very clear what their strategy was.

I was like, well, I may not like it, but I can't argue with that logic.

I can't argue with that.

So your pricing, new communication has to be aligned with the changes you're making

and it needs to make sense and logic.

But most people try to do is they try to tell a sad story.

Like I have to do this and I have no choice because my costs are going up.

I don't personally find that as the best way for most businesses

to communicate a price change.

There's one exception.

If your strategy and pricing is to be the low price leader.

Then what your customers value for, from you is getting the lowest price.

The value is the price.

Therefore you would be communication.

Your communication on the price change would be focused on that value, which is

the lowest prices, but in most businesses, and most of you who are following me.

You are not in this category of trying to be a low price leader.

So the value is not the price.

The value is what people are getting for that.

And I think is a better strategy in your communication to lean into the value,

rather than telling a sad story about how inflation is affecting your business.

That's how I. Perceive it and what I advise many of my clients.

That is what I wanted to share with you today.

So I want you to take a moment and think be honest with yourself.

Are these, or some other myths that you are saying in your head and

telling yourself, are they keeping you from making the price changes?

You know, you need to make.

Head on over to The Pricing Lady dot com, grab a copy of the price check

guide, and also know that later this fall I'm going to be running my raising

prices course or program actually.

And I would love for you to join me.

You'll get more on that to come in the future.

I wish you a great day and as always enjoy pricing.

Thank you for listening to this episode of Live with The Pricing Lady, the podcast.

If you enjoyed the episode, rate, review, and subscribe to it, then share

it with your friends and colleagues.

I love hearing back from you listeners.

If you've got comments, questions, or topic ideas, go on over to thepricinglady.

com and contact me there.

Not sure where to start when it comes to improving pricing and profits?

At ThePricingLady.

com you can download a copy of my Self Assessment Pricing Scorecard.

Find out where it's going well and where you can begin improving.

Or just simply book a discovery call with me.

There we can discuss what's up with pricing in your business and

how I might be able to help you.

Thanks once again for joining.

Remember, pricing can hurt or help your business.

Let's make sure it's helping you reach your dreams.

See you next time and as always, enjoy pricing.