SEVEN REASONS WHY YOU SHOULD RAISE YOUR PRICES
Let’s dive right in. I will tell you 7 reasons why you should raise your prices and then give you seven steps to do it without hurting your business or losing customers.
1. YOU ARE WORKING TOO HARD AND ALWAYS EXHAUSTED
This is the first sign. You are saying yes to orders, working non-stop and making pennies. You are not charging for your labour and find yourself on the verge of burnout. Busy busy busy… that sounds impressive but if it is not translating to a healthy bank account then you are doing yourself and your customers a disservice. If you raised your prices, you would give yourself more room to hire help when you need it, work smarter instead of harder, get more freedom to fund your creativity through learning and networking. Whether you know it or not raising your prices is a service to your customers as well as to yourself.
2. WHAT COULD YOU DO WITH THE EXTRA MONEY? Is it worth doing?
Don’t be shy and don’t feel guilty. Everyone could use more money. Money takes care of our families. It solves problems. Making money in business is a good thing. It is evidence that you have served another human being. It is a reward for making people happy. Aside from that, more money would give you the opportunity to add value to the service you offer. So we are not just talking about the bills you would be able to pay but rather the VALUE you can add to serving your customers as well. With more money, you can develop your skills and building your business. Better cake tools, better packaging, professional logos and labels, classes with cake experts, etc… Isn’t that worth doing?
3. IT INCREASES YOUR VALUE
It may sound funny but its true… people equate low prices with inferior value. So you may be thinking that you are being “nice” by charging low prices but really it makes people perceive you as “cheap” and therefore not to be valued.
You may have started with low prices when starting out – hoping to charge more when you got “better” but I will tell you something, Cake decorating is not rocket science. If you have been decorating for more than 6 months and people are already buying your cakes then please start charging properly for them. Paul from Paul Bradford cakes came to teach a cake business class at our cake school in 2011 and I wont forget what her said. He said that the main difference between you and the “professional” cake decorator is simply that they charge more. When you increase your value, you command more respect. They respect your time and your talent.
4. YOU GET BETTER CUSTOMERS
We have all had one or two of those high maintenance customers. Those that want it cheap cheap cheap but want to have five star service at the same time. They are nit-picking, demanding, needy, underpaying and unappreciative. You don’t need them any longer. It is time to position yourself on the higher end of the market. The fact is that people don’t buy on price alone. They buy value. They buy an experience. They buy a great service. They buy a unique talent.
You need customers that appreciate the value of what you are offering. It’s the same materials that make the Ferrari that also makes the ford escort but when people buy a Ferrari they don’t quibble about price and say “afterall a ford escort is cheaper… “. There is absolutely no difference in cake decorating – it is simply a function of how you position and market yourself and your business.
5. IT GIVES YOUR CONFIDENCE A BOOST
It’s the chicken and egg thing. Do you say “If I was more confident I would charge more”? Or do you charge more for your cakes and give your confidence a boost. Yes I agree it’s a scary prospect (for me included) – You feel guilty – do I really deserve to have more money? You feel scared – What if I lose all my customers? Or you can’t even articulate why you want to remain “invisible” by having your “little” cake business. You are doing yourself a disservice. You are so worth it.
Isn’t it time to get paid for all that hard work that goes into planning, baking, designing, decorating, packaging and delivering each cake? If you continue to charge lower than the value of effort you put in you will only begin to resent your customers and become burnt out as an artist. Your creativity will suffer and the joy and excitement of this our lovely craft will be gone.
6. YOU WILL ATTRACT HIGH-END CUSTOMERS
In every city in the world, there are people who only buy “expensive” items . Pricing is really about perception and these are the ones that perceive more expensive items to better quality and better service. They will only buy within an “expensive” price range. Increasing your prices actually makes you more attractive to these high-end customers and more profit will enable you to provide the quality and service they pay for.
7. IT TAKES YOUR BUSINESS TO THE NEXT LEVEL
I think this is one of the most important reasons. For one thing, you will not be able to sustain your business in the long term with low prices. You are not a supermarket. You are providing a unique one-off service and a unique creation and you need to charge prices that are sustainable in the long term.
When you raise your prices you raise the profile of your business. It allows you to develop the next stage of growth of your business.
FINALLY:
Ask yourself where are you now and where do you want to be in future? This may be that point where you take your cake decorating from being just a hobby to a real business that can actually support you and your family, employ workers, move to a shop, build a website… etc. Having a good price structure will get you on your way.
Higher prices means more profits. More profits means more time to serve your customers. More time means better service to your customers and overall you will have more opportunities to market your business, outgrow your competition and grow your business.
So Eme, how do I go about raising my prices? Glad you asked. Have a look at
HOW TO RAISE YOUR PRICES WITHOUT HURTING YOUR BUSINESS
1. Set your fears aside. They may be many. Big one. Little ones. Don’t even analyse them. Just set them aside. The fears are unfounded and without any basis.
2. Figure out your true price. What is the right amount to charge? What are other cake decorators in my local area charging? If they are also undercharging then check what other cake decorators of your skill level are charging. Can I match or position myself as slightly more expensive. Do not try to be cheaper to undercut their prices. This is counterproductive. And PLEASE do not try to charge the same as waitrose or M&S!!!
3. Communicate your new prices to your customers: This could be by simply displaying your prices boldly on your website and other marketing materials. It could be sending out an email. The end of the year is usually a great time to increase prices. You may wish to offer your old customers an extension of a few weeks before the new prices kick in for them but certainly charge new customers the new prices.
4. Set a minimum price and stick to it. Communicate it. DO NOT GO BELOW IT!
5. Communicate the benefits: The purpose of marketing is to let you customers know what is special about the cakes you offer. Is it the taste? Is it free delivery and set-up? Is it fresh ingredients? Is it the famous clients you have made cakes for? Re-communicate the BENEFITS of ordering cakes from you and the value of the service they are getting.
6. Make a friends and family list and put ONLY FIVE NAMES on it. These are the five people that you will make cakes for at discounted prices. I found this particularly useful because the temptation is to make cakes cheap for my neighbours or my doctor or my kids’ teacher or whoever was nice to me but now, IF THEIR NAME IS NOT ON THE LIST THEN THEY DON’T GET A DISCOUNT.
7. Make small increases if the jump is too scary – A 10% increase or a £10 increase per cake will add up over the long term. A 10% increase will actually add up to more than a 10% increase in your overall income. If you increase prices by just 10% every year you will still see steady business growth.
Your turn:
Do you think it is time to raise your prices? Do you find it scary? I would love to hear from you.
Please leave your comments.
If you have a friend that could benefit from this report, please share with them.
