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Raising Your Prices
I got an email today from a Technibble reader regarding raising his prices. He says that for the past year his prices have been at least half of everybody else is charging in his area. Due to his low prices hes become known as the local cheap computer place which is an image hes trying to shake and gain more higher paying clients.
“How do I raise my prices or better yet; how do I get a bunch of people who wont pay $10 to start paying $70 a repair? How do you explain a price rise if its just a service and thats all you have ever charged?”.
When I was first starting out, my own prices where much lower than everybody elses and it provided my clients the option to “try me out” at low risk to them. Just like you, I also built up a nice client base being the inexpensive guy.
When you raise your prices and have an old client rings you, be sure to let them know that you have raised your prices before you do any work for them.
I too was hesitant to raise my prices because I was concerned about what my clients would think but you will find that when you do mention your new prices is that people will barely bat an eyelid. If you are a good technician and they liked you, they are unlikely to shop around for someone cheaper. Once someone finds a good techie that they trust they stick with them.
To explain the price rise from $10 to $70 to your clients, choose any of the following:
- “Those were my prices when I was didnt have as much field experience. Now days I am much more experienced and I can fix things alot quicker than before”
- “We’ve expanded our business and as a result our overheads have grown. Gotta pay the bills”
- “Rising Petrol costs, you know how it is…”
As for getting those clients who wont pay $10 to start paying $70 a repair; If they wont pay the new prices (which are quite reasonable) they arent really worth having. Fire them.
Use the time that you would have had fixing their computers and use it to get some more higher paying clients. I know that I would rather spend one hour with 1 client paying $70, than with 3 paying only $10. How about you?
Perception of value also comes into play. There is a good chance that you will get more customers from putting your prices up.
“The $70 technician is obviously better than the $10 technician”.
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You always have the options of slowly raising your prices, raise them over time, maybe that will make it a little less painful for your client base. I do agree with Bryce and Gunslinger though.
I remember an article from a while back about not pricing yourself too low OR too high. In my opinion, price yourself for the market you are going after.
I been reading a lot, and i guess its the biggest mistake to start with low price, to gain client. It’s hard to increase price after starting low.
I have raised prices due to the cost of gas and the fact that I use to drive a v6 and I now drive a v8, so the price per mile has gone up a good bit. when I explain this to long time customers they have all understood. I do think its funny that the same people who don’t want to pay you $10 for spending hours working on their computer are perfectly fine with paying a machanic or a plumber $50 an hour.
If you want to up your prices and fear loosing clients you can take a slow route and move bit by bit with the change in gas prices. YOu can also let it correspond to other increasing cost you would incur in this line of work. I have not found it too difficult to jump $5-$15 at one time most people will be willing who are long time customers and as Bryce says in the article its better to have a few willing to pay more then alot paying less.
We’re thinking of raising the prices ourselves, as our overheads are growing, and we might have to start employing some technicians..
If you want to raise them, go for it! I know when I raised mine, I lost some customers I didn’t want to work for anymore anyways AND at the same time my work flow approximately DOUBLED.
It all boils down to perception of value. I’m a firm believer that the average consumer relates value with price. By charging a premium above the rest, you’re establishing in your client
One problem with being very low and trying to present a professional image – $10 customers arent gonna pay for new tools, enhanced training, insurance, upgrades, advertising, web hosting, taxes, equipment, books, etc so $10 shows you are out of the basement part time hobby repairer – not that your skills arent as good as $75 shops but the image difference is there esepecially with commercial clients that know what it costs to run a business. The couch potato slobs that are dribbling food into their laptop keyboards, havent been out of the chair in eons except to get another beer or snack and go from sunup to sundown on the internet are not the clients you want. I called all the locals and then went outside by 25 miles to get an area average also taking into consideration that I offered services they dont ike printers, cabling, etc. To prove most of the locals were hacks in professional clothing it seems one of the originals are still in business along with me and both of us have a good business inter-relationship as he’s mostly an ISP and comnputer sales with very little shop work and rare onsite where I do mostly break-fix, upgrades, warranty, etc and mostly onsite from home to large corporate. We refer things more suited to the other over and work together often on things. I was asked by a regular about getting wired between one building and the other with a 2 mile gap between – that got referred to him and at the same time he referred a national service company looking for someone to maintain a local corporation’s line printers to me – we both made money, didnt have to leave the customer high and dry and have had additional work from these referals.
It takes a lot of time also and you will lose a few percent with each change but gain others at the same time, many times better and more than before.
Try to show them first why your work costs more than yesterday. what do i say?: My work is guaranteed, my skills & knowledge are wider & specialized now… also i think here is when certif. can come into play.
I started out charging too little. Fortunately, I was running my business part time while still in the Navy. My family life suffered.
Even though I knew what the average going rate was, I still felt guilty asking someone for that much money. Once I calculated how much I needed to make a day to pay the bills, and how much my 15 years of experience were worth, I had no problem charging $65 an hour. If a client wants to find someone cheaper, that’s fine. That leaves me with some quality time for my family. If you have the experience and/or credentials, charge what you think you are worth, and what the market will bear.
You have to find a balance between the two extemes: Charging too little will leave you overworked without much pay, charging to much will obviously get less customers, and more pay with less work. You have to find the middle ground to maximize your earnings and time.
If you don’t have to make a living from your computer repair service you could charge less as a hobbyist.
That is a BIG mistake business owners make when starting out. You need to establish your price based on professional rates. There’s a huge cost of doing business. You need to charge appropiately for your market.
We charged slightly less than we do now when we started & then raised prices. Our market is small business/home business professionals. They have the income to pay for our services.
We don’t want cheapo clients. They can go get cheapo repair people if that’s their desire. Who cares! We have many loyal clients who love us & are more than willing to pay for our services for excellent work!
You get the target market you are catering to. Go for quality clients if you are a quality service provider!
It’s the same for all industries, just got to stand your ground. If they’re getting a service they are happy with then they shouldn’t have a problem.
I have to charge a fixed rate here in Northern Brazil. Most of my clients are running pirated newer software on underpowered machines. I have to charge the same rate to do the same job even if the machine is a Pentium 4 with 512mb memory or a new Core 2 Quad with 3 gb memory… it’s only being fair. I have upped my rated three times in the past 10 years and never lost a client.
The ‘value’ of services rests in the ‘TRUST’ that clients demand from the technician. If a client has problems and the technician fixes them ‘everytime’, then, the client is willing to pay the cost of the repair, no matter if it costs more. Treat every client like YOU expect to be treated and your ‘VALUE’ will be ‘priceless’!
Personally I don’t see as a “mistake” charging less when starting a business. At the beginning you don’t have a name or reputation yet, and you should find other ways to find customers. Charging less is a way to do so, although not necessarily the only way. There’s even people who base their business on that… charging less than others (and not only at first, they want to charge less all the time). But I would say that you should just make up your mind on the charge amount that would make you happy, and stick to it.
In the beginning, when you first launch your business seriously, you have to offer big incentives because you desperately need the customers. Once you start growing your customer base, start raising your prices (I think you should do this modestly over time).
In the end you don’t want the hardcore bargain-hunters. These are the people that will call you, and the moment you answer, the first thing out of their mouth is “How much do you charge for …”? I quickly forget about these people because they are going to end up on Craig’s List anyway, usually to their peril. I’d hate to think of running a business that’s completely dependent on the bargain-hunters. Scarey thought. But if you market yourself as the bottom-basement shop, that’s the kind of clientele you’re likely to get.
I believe if you start at low prices because “you desperately need the business”, that is percieved by the customer as well..I have gotten more business by showing people that I have the confidence in my business and prices and stand my ground,.. psychologically it works…and when you price yourself higher in the “service industry”,..its more acceptable than in retail, retail is tough cause there are many out there in the “bottom feeder” bracket that undercut prices so much on a “product” that the value has been depleated completely in “certain” local markets. A service is really individual, opposed to a standard product so you can absolutely raise “YOUR” price because “YOU” are worth it!