Hi Wayne Bettess the Co-Creator of Warrior Trades here,
For those that do not know me I have been a heating engineer for over 15 years, an entrepreneur since I was about 12 years old (from selling sunglasses on the school field to cigarettes behind the bike sheds… some great margins looking back now!!) I have witnessed the boom times and the bust times, this is why I feel us fellow trade professionals are being left well behind when it comes to what we earn….what I mean by that is the money we have left in our pocket and how far it can go in todays price risen world.
Many of you have already read my previous article on ‘Why we must raise our prices’ ( if you haven’t please visit – WHY WE MUST RAISE OUR PRICES before reading on)
Now it’s time for me to explain a few very easy strategies on how you can implement your price increases into your business.
Since writing the article WHY WE MUST RAISE OUR PRICES Many people have reached out to me to express they are fearful of raising their prices, the main objections are listed below-
- “ I will lose a lot of my customers”
- “ My customers will complain”
- “ They have been loyal customers so it’s not fair”
- “ I haven’t got the confidence to do it”
- “ I’ll just get undercut by others”
My one question to anyone that is raising objections is simple…
HAVE YOU TRIED IT?
For many, the answer will be no… My response to those people is ‘JUST TRY IT’, as humans it’s in our nature to ‘ worry’ about things… a staggering 85% of things we worry about never materialise into anything that affects us!! SO STOP WORRYING ABOUT WHAT HASNT AND MAY NOT HAPPEN.
You can sell yourself the false perception that you can not raise your prices for the reasons stated earlier or for any other reason, BUT until you at least TRY IT, how will you ever know???
I received a message this week from a man who read my previous article and decided to take action, he stuck 15% onto the job total and guess what… he got the job with no objections from the client! This is a win-win situation, as the man in question will now complete the work and be grateful for it, rather than being resentful that he is working for below what he is worth. The client will get a quality job with no corners being cut because of money/time constraint on the job. It’s what people call ‘FAIR EXCHANGE’, any good business has to built on fair exchange otherwise it’s nothing more than a house of card ready to fall at any moment.
3 Affective Strategies
Baby Step Method-
As the sub-title above describes, this method is for the more cautious trade business owner. The way to implement this is very simple, all you do is over a period of 18-24 months, make small increases in your charges. The downside of this method is that it takes time to reach your target amount but the big plus side is the vast amount of your customer base will not really notice the change. I would suggest 5 to 6% increase a year until you hit your target, Bingo you’re net profit will be rising, Slowly but IT WILL BE HEADING IN THE RIGHT DIRECTION.
Big Kahunas Method-
Well, I think you can guess where this one is going… Basically, you wake up, take a deep breath and bang your desired increase percentage onto all new jobs, simple… well not quite. I read an article from a multi-millionaire entrepreneur that mentioned in most businesses 20 % of clients will be up to 80% of your headache. Guess what, this method will soon weed out the customers that want something for nothing and that will FREE up your time to provide a better service to your remaining loyal customers, the ones you will now be making a lot more net profit from.
LOW/STANDARD/PREMIUM Price Choice Method
This can be a great strategy, it involves creating a LOW (current prices) standard ( price increase) and a premium ( bigger price increase ) price structure. To put this into a real-life situation to make more sense of it. I’ll give an example using fixed prices, ( so not breaking down costs to clients, as you wouldn’t go into Mcdonalds and ask them what the cost of the burger was to them!)
Low Price – The cost to replace Budget 3 port valve – £155 + VAT ( Gross Profit – £120) This represents your current price
Standard option- The cost to replace a Drayton 3 port valve £180+ VAT ( Gross Profit – £130) This represents a 9 % Increase
Premium option- The cost to replace Honeywell 3 Port for Valve – £240 + VAT ( Gross Profit- £140) This represents a 17 % Price Increase
This method allows the customer to feel in charge, you can not lose on this as the low option was you current price… the next two options are all an increase in prices, by doing this you have increased your perceived value to your customers and in return created more income for yourself.
Up-Sell Method –
This method is for every business in general, but can also be a way for people that can not get past the mental block when it comes to raising their prices. It can quickly start making you more money for every job you do. In essence, when you are at a job you have a captive audience ( The Customer), this is the prime time to sell (I don’t mean rip people off !!), I mean to offer something that they may need. A good example for this would be British Gas who sell hundreds of thousands of carbon monoxide alarms, YOU CAN DO THIS TOO. This will dramatically increase your net margin and help keep the customer safe, That’s a great result if you ask me!
SO WHAT NEXT?
Whatever method you decide to use to raise your prices, it’s paramount that you take action straight away. Do not wait until next week, as that will turn into next month and then it will never happen and you will be stuck 15 years of inflation behind the rest of the UK.
GET STARTED TODAY!!
Warrior Trades is here to help small trade business owners learn, earn & grow so please do not hesitate to contact us with any questions or issues you are facing. We will go above and beyond to help you solve it.
I really hope you have enjoyed and more importantly learned something from this article. Please share it with anyone that you feel it could add value to.
Learn // Earn // Grow
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