The end goal of almost every business is to make money. And yet, as business owners, we often have so much anxiety about how much we charge for our products. Even when you’ve been in the game for a few years, you might still question whether you’re charging too much, too little, or just enough. After all, the value of your labour and the business which you poured your heart into isn’t a small matter.
With the global increase in the cost of living, entrepreneurs are feeling the pinch too. But at what point do you know it’s time to raise your prices?
Here are the reasons why you should be charging more in 2023:
1. Your Prices No Longer Cover Your Expenses
This is the most common reason that entrepreneurs raise their prices. With global inflation still climbing, most small business owners have seen an increase in material costs and overhead. If you sell a physical product, the cost of your raw materials may have gone up. If you have a brick-and-mortar store, your rent or utilities have probably gone up. Even if you sell a service, the various programs, and subscriptions you use to run the service may cost more now.
If you’ve seen a significant increase in your expenses for a considerable period of time, you should consider charging more in order to maintain your profit margin.
2. You Want to Increase the Quality of Your Products
As your business grows, you improve your product over time. However, improving a product often costs money. This might be because you need to purchase higher quality materials that are more expensive. Alternatively, the improved product may take more time or effort to make than what you currently sell.
Remember, your labour is an expense too! Whether it is work done by you or your employees, don’t forget to factor in the cost of your labour. If your new product takes two hours to make instead of one hour, factor that into your costs.
So, if your new products will cost more to produce than your current ones, consider selling the new ones at an increased price. You can continue to sell the current products at the same price if there is still a demand for them.
3. Your Skill Level Has Increased
This applies to the service providers out there. There’s a reason most people charge low prices when they’re new to an industry. When you just start out, your skills and experience are naturally that of a beginner. As you continue to practice and get more clients, your craft improves over time. Whether you’re a hairstylist or a copywriter, the quality of your work in year three will be better than that in year one even if you don’t change the materials and time you put in every day.
Essentially, you are offering a better service than you did when you had just begun, so your prices should reflect that.
Think On It
Raising your prices is worth considering. Every industry has different norms when it comes to determining prices, but don’t let the fear of pushback make you undervalue your work. No matter what, respect your customers or clients and be transparent about any major change in your pricing or products. A business run with integrity always considers the customer’s needs.
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Cynthia Kinyera is a freelance writer specialising in women’s wellness. She uses her easy-flowing prose and digital marketing skills to craft engaging high-converting content. Find out more about her work at cynthiawrites.com.