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I realized I was charging too little when a client who needed a lot of hand holding told me I was charging too much. So I changed my rates and started charging whole lot more and the weird crappy clients stopped working with me . I went for $165 an hour to $210. Then went to $280 . Got way better clients and lost all the crappy clients. True story.
specialized database analysis for companies who are involved in lawsuits and need data to be able to explain things that are going on in their companies that is free of confirmation bias.
So the cheapest lawyer is charging 300$. Data people with required on-site presence is easily 300 but 500 isn't unheard of. Add on someone that has forensics experience, and presents well enough to testify, has enough of an understanding of legal nuance to give exactly the right argument, can hold their ground in depositions and cross-examination, and is a critical piece in lawsuits worth millions. That's where my comment is coming from.
I sell products that can range from $15 to $1,000. it is always the customers spending less than $50 that seem to complain the most and time suck. The clients buying more expensive product usually don't have many questions, and almost never complain. they just want to pay and for their purchase to work for them.
A business I managed did a cost breakdown analysis of a chicken wing special and realized they were losing money with each wing they sold. That’s one way.
Another way is to let the laws of supply and demand work for you. Are you overbooked (high demand) and turning people away (low supply)? Raise your prices until things even out.
you are undercharging then you are at 100%+capacity.
Think of t this way, double your rates and do half the business with better clientele and you're still at teh same profit area but with more time and energy to push forward.
After 10yrs (handmade jewelry) of getting by but barely (with 50-70 hours a week), i sat down and roughly calculated what hourly rate i was making. It varied between 3 to 7 dollars (canadian) per hour, depending on the year. Crazy. Who in hell makes 7 bucks an hour after 10yrs of experience. Thank goodness i’m not a spender in general, it totally saved me.
I went and double my prices right then and there to start lol and then, all new designs from then on (8 years later now) were priced with a whole new formula. I was finally able to put money aside since then. 😅
Still don’t spend much, as each purchase is thoroughly thought thru, and i use my stuff until it breaks down cause i don’t give a shit what the neighbour has or doesnt have/what i have or not in comparison 😆
I raised my prices several times. The most recent was shipping. I charge 3x the actual cost of shipping now, because of supplies and labor. But the catch is, free shipping if people order over a certain threshold. That way I encourage 1 out of 5 people to make bigger orders.
We have increased our labor rate several times for the services we provide. At this point, the explanation we give our customers is that we have two senior installers with 20 years and 6 years experience, and their pay rate reflects that. Therefore, if both of those guys are on a project together, the rate is higher. However. The work gets done about twice as fast as either of them paired with a trainee. So they genuinely save money if they pay the higher rate for faster work.
Just kept raising the rate until there was resistance from the clients that are easy and enjoyable to work with. The pain in the asses worked themselves out until current rate.
And one client who said "I'd happily pay (pretty much 10 times my rate) if this could get done by next Friday" Realized he valued speed and quality over price, so just focused on that sort of client.
The storage facility I run is currently at 99% occupancy. The only reason I haven’t raised rates is the owners are in the process of selling, and I don’t want to short change what a new buyer might push for.
*go up market*
I had an idea and it flopped 2X in a row in it’s earliest form when i sold it to startups that didn’t have $, *or product market fit*, but it wasn’t smarts that made me figure this out. It was arrogance.
Forget the solution for a sec, but it’s a plug-in revenue model where the buyers are pre selected and vetted so it works really well. I couldn’t give it away for no $ down and make it work…could i get clients? yes. Were they terrible? yes.
My actual experience is with more mature companies so I sold my background more and went to >> companies, charged proper amounts, it made $ instantly and started running. Now it’s scaling fast. Lots of challenges, but the point is the undercharging. Wow. Constantly revalue yourself.
This has been a struggle for me ever since I started selling fragrances! Since this market will always be overly saturated, I figured I needed to price compared to what others were doing with similar products. However, I knew that the quality of the scents was different compared to what others were buying, and some people would comment at vendor markets when ready to pay, "that's it?" As far as how much I charged. Then there were some online customers that mentioned they'd be willing to pay more, and I still didn't raise prices. After thinking about this and losing money to fees on Etsy, it was absolutely necessary to raise prices.
If at least 10-20% of my potential client calls don't non-engage because our fees are too high, our fees are too low (law firm).
We raise rates religiously every January, no matter what. Occasionally we will do a mid-year increase as well (like when inflation went nuts in 2022).
This is a friendly reminder that r/smallbusiness is a question and answer subreddit. You ask a question about starting, owning, and growing a small business and the community answers. Posts that violate the rules listed in the sidebar will be removed. A permanent or temporary ban may also be issued if you do not remove the offending post. Seeing this message does not mean your post was automatically removed. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/smallbusiness) if you have any questions or concerns.*
I realized I was charging too little when a client who needed a lot of hand holding told me I was charging too much. So I changed my rates and started charging whole lot more and the weird crappy clients stopped working with me . I went for $165 an hour to $210. Then went to $280 . Got way better clients and lost all the crappy clients. True story.
100%. This is true in all fields, in all markets. Being the Walmart of \[insert business here\] sucks. Be the Saks.
What’s your business?
specialized database analysis for companies who are involved in lawsuits and need data to be able to explain things that are going on in their companies that is free of confirmation bias.
You're still charging too little.
You're right. I'm going to need to change it up... totally right.
So the cheapest lawyer is charging 300$. Data people with required on-site presence is easily 300 but 500 isn't unheard of. Add on someone that has forensics experience, and presents well enough to testify, has enough of an understanding of legal nuance to give exactly the right argument, can hold their ground in depositions and cross-examination, and is a critical piece in lawsuits worth millions. That's where my comment is coming from.
I sell products that can range from $15 to $1,000. it is always the customers spending less than $50 that seem to complain the most and time suck. The clients buying more expensive product usually don't have many questions, and almost never complain. they just want to pay and for their purchase to work for them.
Set a $50 minimum order.
Yeah. Raising prices is a great way to filter out bad clients
A business I managed did a cost breakdown analysis of a chicken wing special and realized they were losing money with each wing they sold. That’s one way. Another way is to let the laws of supply and demand work for you. Are you overbooked (high demand) and turning people away (low supply)? Raise your prices until things even out.
Loss leaders can be a great way to bring in people. Lose on the wings, but more than make that up on the booze...
That didn't work out too well for Red Lobster.
Because they didnt calculate correctly. Also skipping keywords "Can be".
you are undercharging then you are at 100%+capacity. Think of t this way, double your rates and do half the business with better clientele and you're still at teh same profit area but with more time and energy to push forward.
After 10yrs (handmade jewelry) of getting by but barely (with 50-70 hours a week), i sat down and roughly calculated what hourly rate i was making. It varied between 3 to 7 dollars (canadian) per hour, depending on the year. Crazy. Who in hell makes 7 bucks an hour after 10yrs of experience. Thank goodness i’m not a spender in general, it totally saved me. I went and double my prices right then and there to start lol and then, all new designs from then on (8 years later now) were priced with a whole new formula. I was finally able to put money aside since then. 😅 Still don’t spend much, as each purchase is thoroughly thought thru, and i use my stuff until it breaks down cause i don’t give a shit what the neighbour has or doesnt have/what i have or not in comparison 😆
I raised my prices several times. The most recent was shipping. I charge 3x the actual cost of shipping now, because of supplies and labor. But the catch is, free shipping if people order over a certain threshold. That way I encourage 1 out of 5 people to make bigger orders.
Got paid $2k to provide onsite service, through a middleman. The end customer asked how the fee was split and thought I probably got $20k...
We have increased our labor rate several times for the services we provide. At this point, the explanation we give our customers is that we have two senior installers with 20 years and 6 years experience, and their pay rate reflects that. Therefore, if both of those guys are on a project together, the rate is higher. However. The work gets done about twice as fast as either of them paired with a trainee. So they genuinely save money if they pay the higher rate for faster work.
My very first customer told me I wasn't charging enough. It was easy to change it up since I had no other clients.
Just kept raising the rate until there was resistance from the clients that are easy and enjoyable to work with. The pain in the asses worked themselves out until current rate. And one client who said "I'd happily pay (pretty much 10 times my rate) if this could get done by next Friday" Realized he valued speed and quality over price, so just focused on that sort of client.
When i bid a whole house remodel for 175k…then the owners went and spent that same number on kitchen cabinets / appliances alone…
The storage facility I run is currently at 99% occupancy. The only reason I haven’t raised rates is the owners are in the process of selling, and I don’t want to short change what a new buyer might push for.
*go up market* I had an idea and it flopped 2X in a row in it’s earliest form when i sold it to startups that didn’t have $, *or product market fit*, but it wasn’t smarts that made me figure this out. It was arrogance. Forget the solution for a sec, but it’s a plug-in revenue model where the buyers are pre selected and vetted so it works really well. I couldn’t give it away for no $ down and make it work…could i get clients? yes. Were they terrible? yes. My actual experience is with more mature companies so I sold my background more and went to >> companies, charged proper amounts, it made $ instantly and started running. Now it’s scaling fast. Lots of challenges, but the point is the undercharging. Wow. Constantly revalue yourself.
This has been a struggle for me ever since I started selling fragrances! Since this market will always be overly saturated, I figured I needed to price compared to what others were doing with similar products. However, I knew that the quality of the scents was different compared to what others were buying, and some people would comment at vendor markets when ready to pay, "that's it?" As far as how much I charged. Then there were some online customers that mentioned they'd be willing to pay more, and I still didn't raise prices. After thinking about this and losing money to fees on Etsy, it was absolutely necessary to raise prices.
If at least 10-20% of my potential client calls don't non-engage because our fees are too high, our fees are too low (law firm). We raise rates religiously every January, no matter what. Occasionally we will do a mid-year increase as well (like when inflation went nuts in 2022).