Have You Raised Your Prices Lately?

I was attending a networking meeting this afternoon with a bookkeeper who knows how to use the Quickbooks and Peachtree accounting systems well, and can figure out accounting modules in other software systems.  For her bookkeeping time, she was charging $20 per hour.

Yes, you read that right.  $20 per hour.

I was so astonished that I had to ask the question again, sure that I was mistaken in what I heard.  In Southern California, that number should easily be $80 per hour.  To my mind, she was needlessly impoverishing herself in a market that would pay her 4x what she was charging, if she would only ask.

I’ve run across this before with a previous client who was charging $50 per hour for business services, wasn’t charging for 30 minute phone consults and had more clients than she knew what to do with.

The very first things we did were to raise her prices to $65 per hour and charge for any phone consults more than 5 minutes.

Actually, that was the second thing we did.  The first thing we did was get her over the fear she felt at the prospect of doing these things.

She had no idea what the market was willing to pay for the services she offered and really thought her professional services were only worth the $50 per hour she was charging.  She had not made the sale of her own value to herself.  And, after a year of trying to get every client she could, she was terrified at the prospect of letting any client walk away.

Within six months we had her at $70 per hour.  A year later she decided to exit the business for personal reasons. At the time she was a member of a high end referral group.

Rather than say no to referrals while she was exiting the business, she decided to quote $115 per hour, figuring the prospects would go away due to price.  To her astonishment, two of three said yes.

There’s a lesson in that story.

Too often small business people don’t have the confidence to charge what their products and services are worth, and what the market would pay if they would only ask.  They’re leaving money on the table and putting their businesses in jeopardy because they won’t ask for an appropriate price for what they offer.