January 11th, 2010 | 
Author: How To Raise Your Fees
There is a delicate balance between the fee you need to charge for your products and services and the fee that people are willing to pay for them. But with gasoline heating shipping health care and other costs rising there comes a time when you must raise your rates in order to remain profitable.
Most people see their own costs going up and won’t be surprised that you’re raising your fees too. With proper communication about it you should be able to raise your fees effortlessly.
Here are some tips on how to go about it:
1. Don’t let fear and limiting beliefs stop you from raising your fees. If you hear yourself making excuses that you don’t know are true it’s probably your fears and limiting beliefs raising their ugly head. Some of these include “All my customers will leave if I raise my rates” or “I’m not worth the new rate.”
2. Have a clear idea of where your breakeven point is profit wise. No matter how tempting you cannot make a loss on a sale. In fact it’s not just about what you “need” to make it should be about what you “want” to make too.
3. Base your fees on what the benefits and results of using your product or service are worth to your customer. For example as a small business consultant and coach I help people make more revenue and profit in their business. This has a value to self employed small business owner and my fees are based on that value. If you can solve their problems and if the problem is important enough to solve then they’ll pay you an appropriate fee for that solution.
4. Base your fees for services on your level of expertise. If your expertise level is high you’ll be able to charge higher fees than someone just starting out.
5. Check your competitors. Are there people out there with your same skill level charging more than you do?
6. See if your product or service is a “commodity.” A commodity is a product or service that is the same regardless of who is offering it. If you’re selling The Little Giant Ladder it’s the same one that your competitors are selling. In commodity pricing there’s not much room for differentiation and customers will be looking for the lowest price. However if your product or service is unique or your skill set and experience are different and better than your competitors then you can charge more. You’d pay more for Oprah to teach you how to create your own TV show empire than someone you’ve never heard of. Bargain basement prices often scare off potential customers especially if they’re buying a unique product or service. Use commodity pricing wisely and sparingly.
7. Decide in advance whether you’ll raise fees across the board or only for new customers. Even if you only raise fees for new customers there may come a time when existing customers will need to have their rates increased too.
8. Do the 80/20 evaluation. Find the 20 of your customers who bring you the least profit and either raise their rates or get rid of them. This may sound harsh but you’re in business to make a profit and you can’t “carry” an unprofitable customer just because you like them.
9. If you will be raising your fees with existing customers it’s a good idea to call them or write a letter explaining that the fees will be going up to the new rate and giving them a date when this will happen. I recommend giving them at least a two month notice. Will you lose some customers who aren’t willing to pay the higher rate? Yes. But if you do then you need to ask yourself “Why hasn’t this customer found value in what I’m offering so that the new rate was still acceptable to them?”
About the writer:
Karyn Greenstreet is a Self Employment expert and small business coach. She shares techniques skills and strategies with selfemployed people to boost motivation create clear goals and cohesive plans and increase profits. Visit her website at http://www.PassionForBusiness.com.
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Posted in Finance