Understanding how to handle price increases with clients is essential for any business.
But to begin with, most people and businesses around the world price themselves too low.
That’s a fact.
A series of studies and statistics over the years prove it.
People would be willing to pay you much more for your products and services (yes, even during times of “recession,” “summer,” “holidays,” “COVID,” “inflation,” “elections,” and so on) if you would only ask them, if you knew how to explain the true value of your products and services for them, and most importantly, if you believed they’d pay you higher prices.
This is true for employees as well, who are afraid to price themselves higher in job interviews or salary raise discussions and end up settling for lower wages than they could earn for their good work and the great value they bring to the organization.
One approach to learning how to handle price increases with clients is by building a clear, structured price list.
The first things I do in my workshops and coaching programs with clients – individuals, businesses, and companies – who want to increase their revenue is to help them create a structured price list (you’d be surprised how many businesses still work without a price list (!) and set prices based on what feels right at the moment).
A price list they stick to (you’d be surprised how many businesses still give huge discounts to clients, hurting their cash flow, sometimes losing money on clients, and turning every sales conversation into a price-cutting negotiation – instead of a conversation about increasing value), and usually – a new price list with higher prices than what they’ve charged until now.
What’s the biggest dilemma for a business or service provider who raises prices? What do you do with existing clients who have been paying the previous prices and are accustomed to them over time? The biggest fear of people and businesses who raise prices – and I hear this all the time – is that “no one will want to pay me those prices” and that “existing clients will leave me.”
There’s a lot of mental work to do with people and businesses who raise prices – they need to believe in themselves more, understand the true value they provide to clients, look at their market positively and optimistically (and not operate with assumptions like “during this time, people won’t pay more,” “people don’t have money,” “in my market/area, people don’t pay such sums,” and so on), and also know how to explain the price increase effectively, especially how to handle the “it’s too expensive” objections (which will come, but not to the extent or intensity they think.
If all the above conditions are met, most existing clients will simply “fall in line” and pay the new prices without saying a word).
One of the tools I teach regarding price increases comes from labor law, called “deterioration of terms.” This concept describes a situation where an employer worsens an employee’s work conditions – it could be a lower salary than before, canceling salary benefits, changing hours, workdays, location, etc.
The employee can claim this is an intentional “deterioration of terms” and resign – still being considered “dismissed” in terms of eligibility for severance pay.
Let’s get back to your clients. When you raise prices and feel confident in the increase, all your new clients will immediately pay the new prices (they also won’t know how much it cost before and will accept the current rate as it is).
As for your existing clients, who have paid lower prices so far – many will simply start paying you more (proving how much they value you and your services/products, and how much you underpriced yourself so far, leaving “money on the table”…), and some will complain about the price increase and feel like they’ve experienced a “deterioration of terms” (a few may even threaten to leave you at the new prices). Don’t panic.
There’s something you can do.
You don’t need to keep all the existing clients, and usually, the few who leave (or threaten to leave) are those you’d be happy to see go (just as “deterioration of terms” at work is sometimes directed at employees you’d like to show the door without firing them and paying severance).
To convince some of them, explain that it’s not a “deterioration of terms” but rather a benefit they received for a certain period.
That is, they didn’t pay you a fair price until now and are now required to pay a higher, unjustified price. On the contrary – they are now beginning to pay a fair price (the new prices), and until now, they enjoyed significantly lower prices than they should have paid you.
This was just a brief overview.
Raising prices is a complex matter that stirs a lot of emotions and requires your mental work alongside emotional and logical skills to explain the new price list.
But by mastering how to handle price increases with clients, you can build stronger relationships and a more successful business
Want to raise prices?
Want to price yourself correctly?
Want to reach better, wealthier, and more appreciative clients?
Want to build a personal brand and professional authority that clearly commands high prices?
Looking forward to hearing from you!
With love,
Dr. Yaniv Zaid
Leave a Reply