Transcripts
In this episode of Live with The Pricing Lady, we take a look at
Speaker:three things people forget to do when they're adjusting, especially
Speaker:when they're raising their prices.
Speaker:Sit back, relax and enjoy the episode.
Speaker:Hello, and welcome to live with The Pricing Lady, The Podcast.
Speaker:I'm Janene, your hostess.
Speaker:The show is all about helping you build a stronger, more profitable business.
Speaker:We talk about the tactics and strategies of pricing and how you can apply them
Speaker:so that you build your competence and your confidence in pricing.
Speaker:Welcome to this episode today, we're going to be talking about
Speaker:three things people forget to do when they're raising their prices.
Speaker:I love the topic of raising prices.
Speaker:Not because I like to raise prices, but because I know how
Speaker:powerful it is for businesses.
Speaker:And as we're coming up to the end of the year here, I know you are
Speaker:thinking about what should I do with my prices because it's natural, right?
Speaker:We're going into a new fiscal year and we're looking at what
Speaker:we're going to do in 2024.
Speaker:When people think about raising their prices.
Speaker:There's a lot of fear involved.
Speaker:Recently I wrote an article on LinkedIn.
Speaker:I'll put it in the show notes about being trapped under the Boulder of inaction.
Speaker:That's what I call it.
Speaker:The Boulder of Pricing Inaction.
Speaker:You have these thoughts that all your customers will leave or that
Speaker:people will think you're greedy or that it's really hard to do.
Speaker:And all of these are myths.
Speaker:They're mindset oriented, things that are going on that keep you stuck
Speaker:and from taking action, even when you know you should take action.
Speaker:What we're going to do today is we're going to take a look at some
Speaker:of the things that people forget they can do, or they should do when
Speaker:they go about raising their prices.
Speaker:I'll caveat this by saying that while we're talking about it, in the context
Speaker:of increasing prices, this also applies if you're going to be lowering your
Speaker:prices and yes, sometimes businesses do.
Speaker:Choose to drop their list prices.
Speaker:I would say it happens less often than raising, but it can, in some
Speaker:cases be an effective thing to do.
Speaker:The tips that are talking about today apply in that context as well.
Speaker:So let's take a look at the three things people forget to
Speaker:do when raising their prices.
Speaker:Probably the biggest thing that people don't look at or they forget
Speaker:to do is they don't differentiate.
Speaker:And this is a big thing.
Speaker:Here here's what I mean by differentiate.
Speaker:Most small business owners or young businesses, when they decide
Speaker:to increase their prices, they'll increase everything the same.
Speaker:We'll say, yep.
Speaker:We're going to raise our prices 15% and they raised everything by 15%.
Speaker:What's the problem with this?
Speaker:Well, first the problem is, is it's not a very sophisticated strategy.
Speaker:Sure.
Speaker:It's quick and easy.
Speaker:You can do it in one fell swoop.
Speaker:But the problem is that you have some things in your offer, some
Speaker:products or some services or software solutions that you offer.
Speaker:That are probably already well-positioned and it would be difficult for
Speaker:the market to take an increase on them or a big increase on them.
Speaker:And you have other things in your offer, maybe like your little offers or
Speaker:your, your upsells or downsales right.
Speaker:That people are less price sensitive on.
Speaker:And so there's an opportunity there to raise the price on those things a little
Speaker:bit more than maybe your main offer.
Speaker:If you don't think about differentiating, then you run the risk of raising
Speaker:the price on things where people aren't willing to pay more for it.
Speaker:And of not taking advantage of where they would be willing to pay more for it.
Speaker:You see that by doing just a flat price increase on cross
Speaker:everything you actually risk.
Speaker:Making changes that could be hurtful or harmful to your business.
Speaker:And, you know, when people think about raising prices and they have this vision
Speaker:of all their customers running away.
Speaker:If you're not differentiating, then you're actually increasing
Speaker:the chances that that could happen.
Speaker:So this is one way that you can mitigate that risk is by.
Speaker:Raising the prices in the right.
Speaker:You know, for the right offers in the right way.
Speaker:Now the second thing that people forget to do, or actually, I'm not sure they forget.
Speaker:I think they just don't want to do it, is the math.
Speaker:You know, if you follow me, I'm a big stickler for doing the math.
Speaker:Anytime you're going to do anything with your pricing, you want to
Speaker:take a quick look at the math.
Speaker:Never fear.
Speaker:If you're not big on math, I've got some tools that can help you.
Speaker:And we'll put the link to my pricing toolkit in the show notes.
Speaker:Why is the math so important?
Speaker:Well, when you're adjusting your prices, you're adjusting
Speaker:your revenue and your profit.
Speaker:Most people think so we're going to talk discounts for a moment.
Speaker:Most people think when they offer discounts that automatically
Speaker:more people will buy.
Speaker:So they will make more money.
Speaker:But what they don't realize is that they have to sell a lot more at that lower
Speaker:price in order to make the same amount.
Speaker:Conversely, when people are raising their prices, they fear
Speaker:all of their customers running.
Speaker:But when you raise your prices, generally you can afford to lose a few customers
Speaker:and still make the same amount of money.
Speaker:Of course, you have to do the math in both cases in order to understand
Speaker:if that's true for your business.
Speaker:That is why I don't want you to forget to do the math.
Speaker:Please, please, please do the math.
Speaker:And like I said, you can get access to my pricing toolkit online.
Speaker:It is complimentary toolkit and in there, especially two tools will help you.
Speaker:There's one called the discount calculator.
Speaker:I think.
Speaker:Yup.
Speaker:I'm drawing a blank here, but we'll, you'll see it when you get into it.
Speaker:And that one will help you understand if I lower my price by this much,
Speaker:how much more volume I need in order to hit, you know, this other level.
Speaker:And then you have the profit impact calculator.
Speaker:Which will help you look at your business overall.
Speaker:So then it includes things like the volume and the cost of your business.
Speaker:Those two very simple tools can help you do the math around.
Speaker:The price changes that you're looking at doing.
Speaker:And I have to share with you this because it always amazes
Speaker:me the reaction people have.
Speaker:So when I work with clients one to one and in the group programs for
Speaker:raising prices and setting prices.
Speaker:We have tools in those (my) programs that help people do that math more
Speaker:sophisticated than the ones in the toolkit that I just shared with you.
Speaker:Every time when somebody uses these tools, they have this massive
Speaker:big light bulb come on their head.
Speaker:They feel, and they have so much more insight and knowledge into
Speaker:what's happening in their business and how those decisions that they're
Speaker:making around what to do with their pricing impacts their profitability.
Speaker:It gives them so much confidence.
Speaker:So this is again why it's also very important to do the math, because it
Speaker:helps you feel more confident about the decisions that you're making.
Speaker:It also allows you to mitigate any downsides of that.
Speaker:So the last reason are the less actually, it's not a reason.
Speaker:The last thing that people forget to do when adjusting their prices
Speaker:is look at whether or not they actually need to make a communication.
Speaker:And you might think Janene, what are you talking about?
Speaker:Shouldn't I always communicate with my customers.
Speaker:Well, in fact, it really depends on your business.
Speaker:If your business is always new customers coming around.
Speaker:Then there's less reason to be making big pricing announcements
Speaker:about changes in whatever.
Speaker:Now if your customers are repeat buyers, or if there's, you know,
Speaker:a lot of price transparency for you, then of course, you're going
Speaker:to want to make a communication.
Speaker:But it's not the case that just because you're raising prices, you have to
Speaker:actually make a big communication.
Speaker:It really depends on the business.
Speaker:And for example, let's say your, a service provider and you provide
Speaker:services, but it's not like a repeat service that you provide to your clients.
Speaker:It's something you usually do once and then go away.
Speaker:Well then there's no real reason.
Speaker:To make a big announcement about that because you're always bringing
Speaker:new customers in and either they're going to be willing to
Speaker:pay for your new price or not.
Speaker:Right.
Speaker:So it's not, there's that level that necessity to communicate your price
Speaker:changes is not as obvious, let's say as it would be, if you were in a
Speaker:business where you have lots of repeat customers, because then you really.
Speaker:You know, the relationship with them is different.
Speaker:And in order to maintain that trust with them, you would want to have
Speaker:that conversation because that's going to impact their business or their
Speaker:personal budgeting for the next year.
Speaker:So those are the three things I wanted to focus on today that
Speaker:people forget to do when they're adjusting or raising their prices.
Speaker:So from now on, when you're thinking about adjusting your raising your
Speaker:prices, you are going to think about how to differentiate what you're doing
Speaker:amongst different parts of your offer.
Speaker:Second, you are going to do the math.
Speaker:And I don't know if you've heard me say this before, but when I was a teenager and
Speaker:taking piano lessons, my teacher used to threaten me when I didn't practice enough
Speaker:with a thousand lashes with a wet noodle.
Speaker:So.
Speaker:If you do not do the math, that is the consequence.
Speaker:Okay.
Speaker:I'm just kidding, but you know what I mean?
Speaker:And you're going to think about what communication is really necessary.
Speaker:Yeah, it could be also that you do different communications for different
Speaker:customers, but have a think about what's really necessary and what actually
Speaker:suits your business and your customers.
Speaker:That is what I wanted to share with you today.
Speaker:We have got next year, so many great things coming up for you.
Speaker:We're going to be restructuring the podcast a little bit, and I'll share more
Speaker:about that with you in early January.
Speaker:But I wanted to wish you a very happy holiday for you
Speaker:and your family and friends.
Speaker:I wish you all the best in the season.
Speaker:And of course it, enjoy pricing.
Speaker:I'll see you in 2024.