Let’s be honest, we all want to do the minimum work possible to get the best results, right?
It’s okay to admit it. I mean, I like hard work when it’s meaningful and fulfilling — but why work harder than you need to?
That makes no sense. Conserve your energy for more hard work where it’ll bring you the best results.
Which brings me to today’s big win for a small effort.
Put your prices up by 10%. Do it now.
I can picture your face, by the way, as you imagine doing this. Scrunched up and frowny.
And I know what’s in your head and your stomach: six angry doubts standing up and bellowing for attention, and butterflies with razor-blade wings.
Here’s the bare-bottomed truth, though: you are not charging as much as you could. (Nor am I. Nor is almost everyone else who runs a business.)
So, I’d like you to put your prices up. Just a little. Just by 10%.
Most business owners rush to discount their products and services in hopes their low low prices will attract more customers. If you do that, your profits will spiral downwards because your costs will stay the same — but let’s stick a pin in that for a moment, and ask instead if you can cope with the extra demand (if extra demand arrives).
You’ll either get so many orders you can’t keep your delivery promises or keep the same high quality, so you’ll lose customers and make them angry. Or, everyone else will cut their prices too, creating a price war everyone loses — because nothing changes except you’re all making less money.
You’re all back at square one, but working harder for smaller profits. And your customers are getting lower quality and crap service, so you’re probably losing them too.
But enough of that. That’s speculation. Accurate, in my experience, but still speculation. Instead, let’s look at the hard numbers. Cashmoney.
Let’s imagine you’re selling amazing flamingo lamps at £135 each, with a margin of 35%. It costs you £100 to supply the lamps, and you make £35 on each sale.
Now imagine you’ve dropped your prices by 10% to match your competitors, so you’re selling your flamingo lamps for £121.50, giving you a new profit of just £21.50.
That tiny 10% price-cut has stomped your profits down to just 61.43% of what they were (£21.50 ÷ 35 x 100 = 61.43%).
By discounting your customers 10%, you’ve just cut your profits by 38.57%. Does that sound good? I hope not, because it means you’re working much harder to make the same money.
But I promised you a quick win, so let’s raise your prices by 10% instead — because doing that will increase your profits by a yuge 39% (for the same amount of work).
You can increase your prices by 10%, lose quite a few sales — and still make the same amount of money.
How cool is that?
Let’s look at the numbers: your £135 flamingo lamp is now £148.50, giving you a profit of £48.50 instead of the previous £35.
£48.50 ÷ 35 x 100 = 139%
You’ve just increased your profits by 39% for no extra work at all.
And if you’re worried you’ll lose customers, don’t be.
You might lose a couple — but believe me, most of your customers won’t even notice the price increase. You’ll lose fewer than you think, and they’ll be the worst kind of customers, ones you can afford to lose (the ones who are the first to complain about price, and the slowest to pay — good riddance).
Louise, one of my Superheroes, recently put her prices up and most of her clients didn’t even notice. One even told her she could charge more! Louise doesn’t work on Fridays anymore.
Louise’s experience isn’t unique — many of my clients have told me similar tales of increased profits and less woe.
Best of all, the perceived quality of your whole business will go up (more about that in a later email).
Here’s the truth: the hardest part of this is making the decision to take action. To put your prices up.
It’s a brave decision, but it will pay off massively in the medium to long-term — and it’ll pay off in increased profits immediately.
It’s the fastest way to make more money, right now.
Be brave. Raise your prices.
Then sign up to my daily emails to learn how to keep growing your business:
About the Author
Please do share any articles from this site in part or in full — as long as you leave all links intact, give credit to the author, and include a link to this website and the following bio. Vicky is a gin-quaffing, pole-dancing, trapeze-swinging copywriter who writes about the perils and joys of writing, velociraptor training, and running a small business. She writes this stuff on her websites vickyfraser.com and cookiesforbreakfast.co.uk. She’s the author of one book (with two more in utero) and teaches small business owners how to write copy that sells, and how to be more fecking interesting. You can follow her on Facebook, Instagram, Twitter, Pinterest, and LinkedIn.