Why you should raise your prices every single year16th January 2019
What are the things that happen, regularly as clockwork, every new year?
A fireworks display in central London. New Year’s resolutions that are quickly forgotten.
A rise in railway fares.
This year was no exception – fares rose by 3.1% this month, slightly under the 3.4% rise in January 2018. That’s quite a large jump for consumers.
But after the customary grumbles, the news story faded away.
Precisely because the fares rise every single year.
Everyone knows it’s coming, we’re all used to it, so it’s just not remarkable enough to discuss for very long.
Now, imagine that the railway fares had been increased this year by 3.1%, after being frozen for five years.
What a ripple that would cause!
Endless discussion about whether the increase was justified, a lot more complaining, and perhaps even some public demonstrations.
There’s a lesson here for your company.
If you watched the video I sent last week, you’ll have seen one reason why I recommend you raise your prices, soon. Even a small tweak to your pricing structure, which your customers will hardly notice, can have an outsize result on your business.
It is a quick and easy way to increase your profitability.
But as the railway example shows, this isn’t something you want to do just once in a blue moon.
You should revisit your pricing structure and raise your prices every single year, even just by a bit.
It may be counter-intuitive, but the more regularly you raise your prices, the less resistance you will probably experience from your customers.
The less unusual it seems, the more likely they are to take in their stride…..
…And the less likely they are to treat it as a shocking event which they need to think through carefully.
Of course, it’s possible to overplay your hand. There will be a limit to how much you can raise your prices each year.
And if it’s been a while since you’ve told your customers that your prices are going to rise, you will certainly have to think through your messaging carefully.
We help all our clients get their pricing structure right – and then revisit it regularly – because that’s a key part of good financial management for every ambitious business.
You need to keep a constant eye on what you’re charging, and how profitable you are, to grow smoothly from £1 million or £2 million turnover to £5 million, £10 million – and beyond.
If that’s the kind of financial management you’d like for your business, get in touch with me today to discuss how we can help you. I’ll get back to you straight away.