Many entrepreneurs low ball their prices for products and services in the beginning. I did. For my own story, I had a coach that told me what I already knew, I was undercharging. Imposter syndrome is a real thing, and many of us tend to undervalue ourselves and the impact we make in the beginning of our entrepreneurial journey. This seems to be very common with service providers. Coaches, consultants, and freelancers typically start lower than they should, and are sometimes very slow to raise prices. Margins in service businesses are typically higher than many product-based businesses. Because there isn’t a “wholesale” cost, so to speak, many of us struggle to price our services. And if we don’t have a responding increase to the cost of doing business, we tend to struggle to “justify” a price increase to ourselves.
There are a lot of articles and methods for pricing yourself in the marketplace, and also ways to raise your prices. What I want to offer is a way to raise your prices when you are resisting the increase by identifying the increase with a name. We’ll simply call it the “profit line.” This can help with some of the hesitancy to increase prices, your “base price” remains the same but you add on an increase which you categorize and have a real purpose for the money.
This system works because many of us struggle with money mindset, and the thought that raising our prices might mean we are greedy. “I don’t need that much” is the cry of the resistance. But you aren’t in business only to solve your needs. You are also in business to create profit and to reach your financial goals. If you don’t have yours defined yet, let’s get some profit goals and the why behind them written.
You can decide what you want to add as a percentage or a number. For example, you charge $200.00 for a service. You add $20.00 as a 10% pure profit line, and the new price is $220.00 for your service. Your prices are raised, a bit, and moving forward every time you sell that service, you siphon off $20.00 to put into an account for profit. Give that account a name, a purpose. You don’t have to stop at 10%. You can add 50% profit and make your service $300.00. Your decision.
If you are resisting raising your service prices, give this method a try. Go ahead and figure out how much profit you will have in an account in a month if you add this line. Plan your next business move. What is this specific profit amount going to be for? Remember that any money without a name will run off and spend itself. Go ahead and raise your process. Just do it. Add a profit line this week. Happy Entrepreneuring!