Increasing your fees can feel scary. Of course, you will earn more money with each sales, but what if you lose your customers over it? Know this: If you plan to grow your business, you must increase your fees eventually. There are a couple of reasons for this:
- Inflation and climbing costs will eat into your bottom line.
- Your customer growth will slow down over time. When this occurs, increasing your fees is the best way to increase revenue. But how do you know your business is ready for a fee increase?
Following are five signals that you should charge more:
Fees haven't increased in at least one year
Business expenses increase over time; therefore, review your rates yearly. Additionally, the longer you are in business, the more knowledgeable and skilled you become. As your knowledge and skills increase, you can offer better services and products. The value you provide increases, so your prices should increase over time to reflect this.
Customers are being turned away
If your business is service based, you should pay close attention to this. As soon there are more customers than you can handle,consider increasing your rates. A few customers may decide to walk away, but those usually are the ones who are paying you less anyway. This frees up more time for new customers who are fine paying your new prices. The rule is, when demand outweighs your supply, increase your fees.
Conversion rates are too high
It may sound illogical, but conversion rates being too high is really a thing. If your leads are converting into customers at the 80+ percentage rate, this indicates that your prices are too low. It’s difficult to see your conversion rate drop, but it is still a win if your conversion rate decreases by 10 percent while your profits increase by 20 percent.
The competition is charging more
Always keep tabs on what your competitors are charging. Whenever you notice everyone in your industry charging more, it is time to reassess your prices. Charging less than your competitors is a great way to attract customers, but it isn't your only option. Rather than competing on price, charge what you’re worth and according to the value you provide.
People still make purchases during your price increase test
Run a test if you're not confident raising your fees. Increase your fees on a trial basis to observe how it impacts your conversions and sales. I suggest creating A/B tests for your landing pages--one version having a higher price than the other. If you notice that the page with the higher price earns more money during the test period, you’ll have your answer.
Conclusion
With all the above in mind, review your pricing and decide whether a price increase makes sense at this time. If you’re offering valuable services or innovative products, don’t ever be nervous about charging fair prices.