There are lots of reasons to review and increase your prices on a regular interval. Many creative business owners find it difficult how to approach this topic, but in the business world it is fairly normal that prices or fees increase or change.
What is really important: Tell your clients in advance
People want to be able to trust you, and they like to hear the truth, so tell them!
Give them reasonable notice, so they can make a choice.
You might even get some more clients, as raising prices is a great excuse to get in to contact again with previous clients!
What is your reason to raise your price?
Reason 1: You don’t need to have a reason!
You don’t need to defend yourself, as that will put you on the back foot.
But some of your clients might want to know, and you might feel better telling them.
Reason 2: You want to earn more
You might have realised that you have been undervaluing yourself or that you want to earn more money. You might want to read this blog post about ‘I am busy but I am still earning less than the minimum wage’ to help you think more strategically about your business and what you earn.
Increasing your prices might have less overall effect than you think it might be. If you increase your prices by say 20% (which would possibly make a huge difference to your income) would you lose so many clients that your profits will go down? It’s unlikely. But if you want to learn more about how to make your creative business more profitable, then do our profitability quiz here.
Reason 3: Your costs have gone up
Are you keeping up with the extra costs of your business? Due to the current economic conditions and annual inflation nearly every business has to and is increasing their prices. Your raw materials (for example the price of gold!) or travel costs might have increased dramatically and need to be carried over (more) to the client.
January is normally a month when companies increase their price.
Reason 4: Reposition yourself
If you are rebranding your business or want to reposition yourself then you need to think about your prices too.
What price do YOUR clients expect to pay?
Every price tells a story …
In fact if you charge too little your dream clients won’t actually buy more. No, instead they will think: ‘What’s wrong with this?’ as they often know what the going price is or what to expect.
Reason 5: You want to work less hours but earn the same
You are busy and overbooked already, and want to start working less hours. Then it’s a good idea to start looking at increasing your prices or at different income streams that earn you more money (for example: licensing and royalties) to increase your salary while working less hours.
Reason 6: Your profile & credibility have increased
Creatives who have worked for a while can increase their prices. In fact: clients expect you to!
If you have done more training, have become quicker or more effective in your work, your credibility has increased because you have taken part in exhibitions or won awards, then its expected that you charge more than somebody who has only just started.
Reason 7: You want to start selling to retailers
I major issue for many new creatives is that there prices are actually too high when they start out, because their costs are high and they are often slower and less experienced than creatives who have worked for a while. That makes it really hard to sell both to consumers (via your own website and studio) as well as to retailers, as retailers charge a commission on top of your price. Your own wholesale price (that the retailer will pay to you) will still need to cover your costs, and if this is high than the added commission will make your retail price far too high.
That means that in the first 3 years or so of your business you will need to focus on selling to consumers yourself, and then slowly increase your retail price so that you are able to get a reasonable wholesale price from your retailers. For more information about how to calculate your whole sale and retail price, and how they work click here.
Reason 8: There are major changes coming up in your business
If you are currently working from home and you want to move to your own studio or a larger studio, and your costs (especially your overheads) will increase, then you will need to plan ahead. The same is valid for example if you are currently not charging VAT, but will need to in the near future (e.g. when your turnover is starting to hit £65K).
If you know that your costs will be increasing in the near future then it makes sense to plan ahead and start to increase your prices incrementally now, instead of surprising your clients with a sudden price increase of 20% to cover your VAT or other costs.
How to introduce your new prices?
Firstly, as said above, let your existing clients know in advance.
It is far easier to increase your prices if you provide a service than a product, as they are less comparable with each other.
In fact, if you provide a service you might not even state your prices (on your website or brochure), as you want people to contact you to discuss their specific requirements and provide a specific design brief and quote. Unless your service is a very specific programme with specific features that clients always get as part of a package you will not need to provide a fixed price (and therefore it is easier to increase it).
If you increase your prices of your product or your hourly rate then do this by a percentage, and introduce in the first instance to new clients. If you want to you can give a reason, but you don’t need to – be confident about it that you are worth it!
How do you increase your prices if you sell products?
If you want to avoid any disgruntled clients then the easiest way is to discontinue that series of products. Sell your existing range (let your existing clients now that that’s what you are doing) and then introduce a new collection of products at a higher rate.
If your work is appealing to collectors they might actually love it that you are increasing your prices … their collection is getting worth more too!
Are you worried that clients might think you are too expensive? Read this blog post. And if you want to learn how to sell ‘expensive’ crafts online, then check out this post.
Be confident about your work and communicate the value that you add to that specific client, and you will be able to charge the price that you are worth!