You’ve done your market research. You know your product or service is underpriced and you’ve got the data to back it up. Yet something is holding you back from raising your prices.
It’s not unusual to hesitate. The idea of increasing your rates often triggers doubt and worry. You may find yourself asking:
These are valid concerns, but they shouldn’t stop you from taking action. By avoiding a price increase, you might be unintentionally doing yourself and your business more harm than good.
Take Abby Langmead, owner of Paws N’ Claws Pet Care in Fort McMurray, AB, for instance. Her research, and feedback from her clients showed that she was underpricing her pet care services. She knew it would be hard to sustain her business if she continued to operate with these low rates. In spite of that, she said,
“I felt nervous when thinking about raising my prices, scared I would lose clients.”
When you keep your prices too low, you aren’t just leaving money on the table, you’re creating a perception of your value that may not align with what you offer.
Here’s what happens when you underprice your products or services:
1. You position yourself as a “cheap” option: Customers associate low prices with lower quality. Even if your work is outstanding, underpricing signals that you’re not confident in your value. This can make it harder for you to stand out as a premium choice in your industry.
2. You attract price-conscious customers: Lower prices tend to attract customers who are primarily looking for the best deal. These clients are often the first to leave when someone cheaper comes along, making it hard to build a loyal, long-term customer base.
3. You limit your ability to grow and reward yourself: The revenue you’re leaving behind could be reinvested into your business (new tools, better marketing, or additional training) or used to pay yourself what you deserve for your hard work.
Raising your prices doesn’t have to be a leap of faith. With the right approach, you can increase your rates while maintaining trust with existing clients and positioning yourself for long-term success.
Here’s how:
1. Trust your research: You’ve already done the work to understand where you stand in the market. Trust the data. If you know your prices are too low, it’s time to bring them in line with industry norms.
2. Clarify your value proposition: Be clear on the unique value you provide. Do you offer better results, personalized service, or specialized expertise? By understanding and articulating why your product or service is worth more, you’ll make it easier for clients to see that value too.
3. Communicate the timing: For businesses tied to seasons or annual cycles, timing is key. Consider implementing price increases during natural transitions (like the start of a new quarter or season) so it feels strategic rather than abrupt.
4. Give your clients early notice: Don’t surprise your customers with an immediate price increase. Instead, communicate the change well in advance. A thoughtful, transparent explanation builds trust and gives clients time to adjust. For example: “Beginning next quarter, we’ll be updating our pricing to better reflect the value of our work and ensure we can continue delivering the quality you expect.”
5. Accept that you may lose some customers: Not everyone will stay on board when prices go up, and that’s okay. Customers who leave because of a price change may not have been your ideal clients to begin with. Focus on attracting customers who value what you offer, not just the price you charge.
6. Focus on the customers you’ll gain: Higher prices position you to attract customers who are willing to pay for quality, expertise, and value. These clients are more likely to stick with you long-term and appreciate the true worth of what you provide.
Following these principles, Abby adjusted her prices and has not looked back. Here is her experience in her own words:
“I had a couple new clients reach out not asking for my price list but to tell me they pay more than what I charge, it helped me see that the level of care I offer is worth more than what I was originally charging. As for my fear of losing clients, I realized that the demand for my services was high enough that I could afford to lose a few customers if it came down to that.
My target market has always been people like me who treat their pets like family and would pay ‘an arm and a leg’ to ensure their pets are in good hands, so most reactions from my current clientele were positive. I had one client tell me the new prices are out of her price range, however she had also said my old lower prices were also close to being out of her price range.
New customers have been accepting of the prices! Some will say it’s more expensive than what they’re used to. After I explain how my pet care is different from any other business in town, they book with me regardless of the price. I’ve been looking at new ways to advertise what makes us different and why we’re worth these higher prices so I don’t have to explain it as often.”
After making the price change Abby says she feels:
“...relieved, glad that I didn’t lose my best clients and happy that I’m finally charging what I feel my business deserves.”
Raising your prices isn’t just about making more money. It’s about owning your value and aligning your business with customers who appreciate it. By trusting your research, communicating clearly, and focusing on the long-term benefits, you can confidently take this important step.
Remember: You are worth it, and so is your work.