A quick way to immediately raise your profits are to raise your profits.
This may be a scary idea for many. After all, aren’t people always looking for lowest price? Hopefully that isn’t your customer.
When I first started my limousine service in 1987, I didn’t know what I should charge. I called some other local competitors and price shopped what they charge.
Next I discounted my rate lower than theirs. I was new and inexperienced and that decision wasn’t a good one. It was a while until I realized I wanted to raise my rates, and profits. SInce my company mostly drove business executives to and from the airports and New York City, I needed to first convince myself that my customers would be willing to pay the higher price and not leave me for another cheaper competitor.
What I did first was to up what I was presently doing. We started offering chilled Poland Springs bottled water. We offered an Express Pick Up option to help our executives and busy travelers to get into the car quicker and home quicker. We increased what we normally offered first.
Next we tried a modest increase. We quoted rates at five dollars more than we were used to. We picked a date, January 1st to increase all existing customers charges too. No one batted an eye.
We started our new higher rate for all inquiries as well as existing customers.
We realized a few things. First, we immediately increased our revenue and our profits without any increased costs.
It’s often the fear of the business owner that if you raise your rates you’ll lose your customers. That’s just a fear, not reality. If you’ve been serving your customers consistently well first, they will be less price sensitive. The customer who wasn’t willing to pay your previous price won’t pay your new price either so that isn’t a loss. You’ll actually attract better customers.
I would suggest looking at your pricing and come up with an educated price increase, Pick a price that is modest and not too severe, but is meaningful. Perhaps a five percent increase to start.
If you were to take your annual revenue and increase it by five percent without any additional cost, that’s also a five percent increase in profits.
It’s also said that companies like Apple, Marriott and other higher priced companies also have a higher perceived value.
This is a repeatable revenue and profit builder. You’ll have to decide when the next price increase makes sense. I think that after the results of your first time, you’ll be more comfortable the next time.
To summarize, what are some little things you can do that will up what you are presently doing? When customers first see you doing things to improve their experience, they will be less likely to be resistant to your new, higher price.