Are You Charging Enough?

5 signs it’s time to increase your prices

Raising your prices is scary. Sure, you’ll make more money with every sale, but what if your customers refuse to pay the new price?

The fact of the matter is, if you want to grow your business you’ll eventually need to raise your prices. There are two reasons for this:

• Inflation and rising costs will eat into your profits.
• Over time your customer growth will slow. When this happens, raising your prices is the best way to increase revenue.

But how do you know your business is ready for a price increase? Here are five signs that you should charge more.

You haven’t increased your prices in over a year

You can expect your business costs to increase over time, so you should review your pricing on a yearly basis.

But there’s another reason why you should update your prices regularly—the longer you run your business the more skills and knowledge you gain. This allows you to offer better products and services.

Over time the value you provide increases, and your prices should rise to reflect this.

You’re turning customers away

If you operate a service-based business this is something you should pay close attention to. The second you have more customers than you can handle it’s time to consider raising your rates.

Sure, you might lose a few customers, but the ones you’ll lose are most likely the ones paying you less. This frees up more time for new customers who are willing to pay your new prices.

Basically, you want to raise your prices every time demand outweighs your supply.

Your conversion rates are too high

This might sound silly, but there’s such a thing as having a conversion rate that’s too high. If you’re converting leads into customers at a rate higher than 80% that’s a sign your prices are too low.

It’s tough to see your conversion rate drop, but think of it this way: if your conversion rate decreases by 10% but your profits increase by 20% that’s still a win.

Your competitors are charging more

In addition to reviewing your own prices on a regular basis you should keep tabs on what your competitors are charging as well.

If you notice everyone else in your industry is charging more it’s probably time to reevaluate your prices.

Sure, charging less than your competition is a great way to attract customers, but you shouldn’t feel like this is your only option. Instead of competing on price, charge what you’re worth and win customers based on the value you provide.

You test a higher price and people still buy from you

Still not sure if you’re ready to raise prices? Then run a test. Increase your prices on a trial basis to see how it impacts your conversions and sales.

Better yet, create A/B tests for your landing pages with one version having a higher price than the other. If you find the page with the higher price makes more money during the test period you’ll have your answer.

With all the above in mind, have a look at your pricing and decide whether a price increase makes sense for your business.

If you’re offering innovative products and valuable services don’t ever be afraid to charge a fair price.

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