Do you get enough cash flowing
into your small business?
You put your own money on the line to get your small business going. And you’re scrambling every day to make it go. But living paycheck to paycheck isn’t much different than having a JOB. And, as an entrepreneur, you’re covering overhead, taxes and payroll too.
You feel that “rock and hard place” feeling. You you need enough work to pay the bills. And you’re tempted to cut prices to get more clients.
Cutting a rope doesn’t make it longer
You cut your margins to the bone when you lower your prices. You’re walking a high wire over the Grand Canyon without a net. One slip, one gust of economic wind, and you’re doomed. But you keep inching forward because you think your price is what clients care about.
I know how you feel. I’ve been there
And every time we’ve cut prices in our small business I remember why I always say, “Bad business is worse than no business.”
You may not already be aware that 3 out of five small businesses either lose money or only break even. And eight out of ten fail because they don’t have enough cash flow.
But there is a simple solution for your cash flow
RAISE YOUR PRICES!
That’s right. Think about it. Doesn’t it make sense? You get more cash when you charge more for what you sell.
I know! You’re shaking your head saying your sales will nose dive and your clients won’t stand for it if you raise prices.
Here are the three top reasons you should raise your prices.
- Your clients value you and your product or service more.
- You are free to deliver more value. (In fact, you’re inspired to deliver excellence.)
- You weed out most of the cheapskates, whiners and complainers.
It’s all about value
Think about it . . .
How do you determine how good a product or service is? No, this isn’t a trick question. You judge how good something is by the cost you pay, right? Your clients will do the same. They’ll value your service or product more when you charge more for it.
Consider this . . . value is in their mind. Value is not your product or service. Look at the difference between a Seiko watch and a Rolex. The value isn’t in how well they perform at telling time. The real value is the image Rolex created in our
mind through branding and marketing.
Your price spurs you to give excellence
Doesn’t this make sense? When you charge more you’re motivated to give your client the value you sold them. And you have the profit margin to deliver it. Cutting prices, on the other hand, tempts you to cut corners in a vain attempt to keep your profit margin intact.
Your price is a filter
Let’s imagine you decide to buy a Tessla. Will you be haggling with the salesperson over price the same way you would if you were buying a used Honda. You have higher expectations when you buy a Tessla. But you also have a different kind of respect for the sales process.
This is true: you feel better about yourself and what you purchase when it’s a premium price, or even a luxury purchase.
You may have to learn to think differently
If you’re like me, you started your small business doing something you’re good at that other people will pay you to do. You may agonize over how to justify charging more. That’s understandable.
In my case, my wife and I were hard-core DIY remodelers. Doing everything ourselves was our only option because we had more time than money. And we had very little money.
Brenda stewed over giving a price for one of our early faux finish jobs. “Who would ever pay $1800 to paint a master bedroom?” she exclaimed.
“But that’s what Kelly (our business coach) said it’s worth,” I replied. “Just tell her the price and try to act normal about it.”
Our client didn’t even take a breath before saying, “Yes.”
Keep raising your prices?
You should review your prices once or twice a year when you’re a small business owner or doing freelance or consulting work.
We just raised our prices again. And we are on the high end of prices for our industry. Our competitors pulled up even with us so we pushed ahead some more.
If you’re charging less than your competition, you need to pull up at least even with them. You cheat yourself, your clients and your industry when you sell yourself short.
My special offer: How to price your work for profit
I’m putting together an online training about how to price your work for profit. I will offer special pricing and incentives to the first group because I’ll rely on your feedback to make it better.
Join my email group and you’ll have the first shot at being part of this first class.
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