What’s In This Episode:
Hi, we are trying something new this week. We are including whole transcription in the show notes. This time we used machine transcription and it got a little messy. Next time we will do better.
Brad: 00:26 I’m Brad from anchor advisors. Jill from the founding moms. And today we’re talking about how do you go about raising prices for your services. We’ve been talking about raising prices in general. Yeah. And today we’re going to get into the nitty gritty. That doesn’t sound fun, but before we do that, Joe. Okay. All right. Let’s just put ourselves in a frame of mind here. Let’s, let’s get into a mood. So let’s say that you’re sitting down with a client, Hey, is this a romantic mood? Let’s do you have romantic modes with your yes. Mood. We’re getting home to, we’re getting into the mood raising prices. Oh, got it. So you’re seeing that with a client and you’re about to tell them that this thing that you’ve been doing for them for like $4,000 now it’s going to cost them $5,000 okay. How are you feeling?
Jill: 01:13 What’s going on inside you? I should tell you, you didn’t raise your prices enough, but you, you mean me? The client? No, I mean you the, if you’re, if you’re, I’m the one member, this news to the client. Oh, extremely fearful. Fearful, extremely fearful that they’ll say so what kind of Iran? Oh, so you think they’re just going to drop you like a hot potato? Yeah, of course. That’s, that’s the reality of my mind. That’s not the reality of the [inaudible]. So, so your expectation, the thing that’s most likely to happen in your mind is they’re going to fire me. Something bad will happen. Something bad. There’ll be upset at least. Yes. Yeah. Interesting. And so, so when you’re feeling that way, what did you think? I was going to say? I’m just listening. I’m trying to be with you here. Okay. So when you’re feeling that way, how confident do you think you come across?
Jill: 02:02 Not confident at all? Yeah. Cause fear. Fear is really not good for us. Hold on. I can have the fear but still look like this is just the way it’s going to be. Okay. So maybe I wouldn’t look fearful, but I would be very panicked that it would go badly. Uh, but you know what? I know having a conversation with myself, maybe they, they would still sort of smell it on me that I’m right inside. Right. Because fear. Fear from a neurobiological perspective. Yeah. Fear actually makes us stupid. It, it reduces the blood flow to our prefrontal cortex because it, because when we’re, if we’re, if this fear is actually something that’s going to kill us or eat us, yeah. We don’t want to think through like what should be my choices here and no, we just want to kill something or get out of town. Right. And so the more we’re feeling that fear in our body,
Brad: 03:00 right, the less we have to work with in our brain. Interesting. Thank you, doctor. I was, I was actually thinking that I don’t know if I would deliver such news until I was comfortable with it and didn’t have that reaction. So what would you go through to make yourself more comfortable? Like, like how would you rehearse this moment to kind of take some of that fear out? I mean, you know me, I like to talk. I would go find people and I would talk to them about it and I would rehearse it. I would totally, and yeah, I’m going to do this. What do you think? Does this sound crazy to you? Uh, I somewhat do that for the feedback, but I somewhat just do it to get it off my list. I’m saying this more for the audience than for anything else. But it’s so, it’s not crazy to like rehearse a conversation like this, like not in my world, but I’m pretty crazy.
Brad: 03:46 So I think it is not ever crazy to rehearse something. And I think a lot of people, their first reaction is, but I don’t want to rehearse this. I didn’t want to tell people until I’m going to launch. Like, this is a secret. This is something that, or I’m so embarrassed and I need to get rid of the fear, so I need to practice it. Except that it’s so embarrassing and I’m so scared. I can’t even say it. I can’t even tell people. I mean, this is one of those places where it’s great to have a mastermind group or some trusted business owners where you can be like, just let me do this too with you three times. Like, just, just let me try this out. Yes, and it’s interesting that when we have this at our founding exchanges, no matter what city these women are in, they will, one woman will practice it with the rest of the group and the rest of the group, you will watch their shoulders go down.
Brad: 04:29 Yes. Oh wait. She could see, I could then do that. And this is not hard and this isn’t scary. And a mastermind also, the people that are listening are also, it’s normalizing for them that, Oh, I could have this conversation too. Right, exactly. And I know that the smallest amount we ever charged for our founding exchanges was $10 a month. It’s ludicrous to my ears now. But that’s what we did for years. And the day that I announced that we were bumping that up, yes, it’s now $35 a month, which is still is still ludicrously low, but so much more expensive. I was so scared to tell my giant membership that we were bumping it up. We deserved it. We offer way more than $35 a month can buy. I can’t even tell you. I still remember the feeling of what if I literally said to people, what if my business goes under when if I completely have nothing tomorrow, once I’ve announced it. Right. And I’ve been in business a long time and, and just to continue this thought process. So I agree with you that my F my fear or my expectation is that they might fire me. Yeah. But in reality when I’ve gone and done this, yup. How have people reacted? Like what percentage of time have people been like, Oh yeah, you deserve it. Yeah. And some people were like, finally, like, I’ve been getting a great deal this whole time. Right. And a few people will be like, ah, I don’t know. It’s a lot of money.
Jill: 05:58 Yeah. Then you can say, you’re right, it is a lot of money. You know, should we make arrangements to finish up or were working together before the price increase comes into effect? Right. I mean, do you remember the last time somebody raised their prices on you? I don’t remember. Um, I know
Brad: 06:13 there was a woman on my team who raised her prices some years ago. I remember feeling her panic through the email when it got to my inbox. She felt so badly that she was raising it on me, but it was time. She had been for years, way too cheap. Uh, and I found I was writing her a love letter, you know, Hey, I really appreciate you deserve this. I am happy. You’re so good and so valuable to me. Uh, and yeah, she’s doing just fine. She survived.
Jill: 06:46 All right, so heart is still beating. I just wanted to put that out there because I think this whole topic emotionally is fraught, but, but I do want to talk about sort of the, the mechanics of how to have that conversation in a way that’s going to lead to people saying nice things.
Brad: 07:02 Right. And are you suggesting that everyone have a conversation or can’t this be done in an announcement form via other technologies?
Jill: 07:12 It depends on what kind of relationship you have with clients. Like obviously if you have 200 clients, you can’t have a conversation with every single one. But if you have five clients, I would recommend having a conversation with every single one on the phone in person. Again, how do you work if you, if you’re working over the phone or over zoom with people, then do it in the way that you normally just make it a normal conversation. I guess what I’m trying to say. Yeah, but, but keeping in mind, going back to last week’s episode, we talked about first you’re going to sell your new price to new people, right? So that’s part of how you build your content easier because you don’t have a relationship with them. And if they say, Oh my gosh, that’s way too expensive, all it costs you is one leap, right?
Jill: 07:52 It’s not like you ruin your whole business. You’re talking to just family. So, so you’ve already sold this service at a new price to several people, right? And so that hopefully is helping you to build your confidence. Now you want to go back to your old clients and you want to have a conversation with them about this new price, right? Right. And I want to stop and just say, and I know we’ve said this in previous episodes, when you’re going to raise your price, make it worth it. Don’t, don’t raise your price 3% or 5% like what does make it worth it mean? I mean, may raise your price by 20% by 30% by 50% by 100% 3% feels good to me and feels safe. It does feel safe. But now you’re going through all the work and all the risks and all the emotional baggage raising your price, right?
Brad: 08:44 Getting 3% back. Like please just make it more significant than that. I mean, I dunno, I’m arguing with you. I’m on your side, but just thinking through it, I’m trying to play today advocate of what everybody is actually thinking, but not saying out loud about that.
Jill: 08:59 Well, here’s the other thing. I think that people do like three or 5% because they’re thinking
Brad: 09:03 cause it, it’s a cost of living. It’s inflation. It’s the cost of doing it. It’s also because we read those figures in some stupid article that told us we use it three to 5% and then you will be justified because,
Jill: 09:14 but, but that’s my point. You’re not justifying this because your costs have gone up. You’re justifying this because you’re delivering so much value.
Brad: 09:22 I, I know that and I think everyone listening understands it. Maybe they don’t. But if they do, 20% still sounds ridiculous. Bread. Oh no it doesn’t. Yes it does. If I was so big, it’s so cute. If I was working with you for $4,000 a month and now it’s $500 a month, right? That’s a 25% increase. Can do math. Okay, but it still sounds like a terrifying because also we’re forgetting the convincing somebody to pay us $4,000 a month was a lot of work, but I have people that are paying me $5,000 a month. I’ve already sold people at $5,000 a month. You’re right. So, so I’m worth it. There are people that have said, there’s no question that you’re worth it. This is not about how you are or are not worth it. It is about how you feel that you are all not worth it.
Brad: 10:06 I’ve through the ear holes right now, I’m trying to tell people, you are selling value. Oh, you are worth it. Oh yeah, you’re not selling costs. You know what’s funny about this? The people that you, not the newbies, but the people you have to go back to who’ve already been paying you the 4,000 or whatever, they’re paying you, they like you, they’re your clients. They, they think probably more highly of you than you think of yourself. And so when you say to them, it’s time January one April 15th whatever the date is, it’s going up. I hope that they are just as proud of you as I was about my team member, because why wouldn’t they be? They’re still working with, I have had people
Jill: 10:48 say to me, well, Brad, last month you were charging me $4,000 a month. Why is it that you’re worth so much more next month? Well, how to justify that they should not correct. Correct. Well, no, they’re, they’re trying to, they’re pushing back. They’re saying, you know, 4,000 was a value for me. Why is 5,000 value right? And I need to be able to be confident and say, well, first of all, you were getting a great deal. You know, 4,000 was a great first response. Right? Secondly, I have other people that are paying me 5,000 and so the market is validated.
Brad: 11:22 The reason why, because I have other people pay me five K now you have to pay me.
Jill: 11:27 Well, no. The reason why is because I’ve learned so much and I’m delivering so much value, but that my, when when you first hired me, 4,000 was a great value. Can we role play for a second? Sure. So rather than am I, are you giving me more stuff next year? I’m not giving you more stuff. I’m giving the same stuff for $5,000 so I’m just supposed to accept that I’m paying more now for exactly what you gave me before. Well, when we started working together, what were your expectations about? What, about the what were going to get really help me improve my business? And is that happened? Yes. And so you, I’ve exceeded your expectations. Yes, definitely. Right? So you’re, you’re getting a really good value because you’re getting more than what you paid and I love that value. You do. And, and I’m saying that I need to capture a little more of that value for myself.
Jill: 12:14 And if that, if, if you, if you don’t want to pay that, that’s fine. We can talk about how we just roll off this assignment, but, but for me, I think that’s value. I’m sorry, now I’m back to Jill. Have you ever actually gone off and said, Hey, well then we’ll dismantle this relationship? Absolutely. You have said that. Absolutely. And how often has that happened? Um, a couple of times. I mean, there are people that are just stuck on the price and more often than not, they’ll go with you more often than not. Interesting. The ones that are stuck on the price. Yep. Usually we’re at the end of the assignment. Right. And maybe there isn’t more value there and it’s just a way to end the assignment, which is fine. Right. But then that’s a natural separation because correct. They didn’t see the value and they didn’t, things didn’t work.
Jill: 12:56 Right. Yeah. And, and truthfully, when I go through and raise prices with my clients, I start with the ones that I know that I’m killing it with. Right, right, right. And the ones that I’m three months from the end of the assignment, I’ll get to them last and let’s do some math for the listeners. So if you increase your prices and a handful say yes. And then a couple of folks I buy Sianora it doesn’t really matter cause you just raise your prices and make, well let’s do the actual math, actual math doing the general good, simple. Let’s say you have 10 clients at $4,000 a month. That is, I wasn’t listening because I was signing so Hawaiian’s $44,000 a month, right? Yeah. If I raise my prices to 5,000 and only have eight clients, 5,008 clients, also 40,000 and no making the same amount of money with only eight clients, that’s a win for me.
Jill: 13:52 It is a win. And hopefully Brad’s brilliant math can show you that it is 100% worth it to raise your prices if nothing else through the fear, because you’re going to be able to do less work for the same amount of money or serve more people and make more money because you’ve sold some new clients at $5,000 right? God, it’s such a win, win. Hard to not [inaudible] so, so again, some mechanics here and I go to tell clients about this new price. I’m not telling them that next month I’m going to charge them $5,000 so instantaneously this day, of course I’m not going to know I’m putting it out in the future. So for instance, if I was doing it today in the middle of December, I might say, you know, starting February 1st like I’m running, I want to give them some time. Give them time, right? Yeah. And that time is there because if they say no, I want to say, great, well we’ve got six weeks then to finish up the work that we’ve got together right now, some people will be like, ah, we can’t finish up by February 1st it’s going to take us till maybe April 1st yeah.
Jill: 14:56 Then I might say, okay, well if you want to get that last little bit finished under the old price, if you pay me by February 1st I’ll accept payment for those future months at the old price. Love it. Because that way I’m, I’m giving something up, but they’re giving something up too, right? Yeah. So, so if I’m taking a discount, at least I have the cash in my bank at least
Brad: 15:16 I love that. And I wanna I wanna shout out to everybody who does not have a small group of clients but who has a lot of clients and you need to let them know not in a phone or conversational way. I think Brad and I have just mentioned a lot of language you can rewind in use in writing. I don’t think it’s very, it’s not that much different.
Jill: 15:35 Well, talk to me about that because I, I mean I’m mostly, I tend to have eight to 10 clients, something like that. And so I’m getting lots more so, so what’s that like then to send that out as an email?
Brad: 15:46 It’s extremely scary no matter what. It has been scary in my experience. But uh, you have to come up with language. The semantics are really important because you want to lay out pretty instantaneously. The why. Here’s why we’re doing it. This is what we believe. We know we’re going places, we want to take you with us, et cetera. And, and keeping in mind the why is never about cost. No, it’s all about the values. It’s all about how we’re moving up in the world. We want to take you with us, et cetera, whatever. It could be different for you, but, but to make sure that it’s not dear crowd, we’re raising our price and here’s the new one. So go to this link. Put in your credit card. Yeah. It’s all about this is, it’s essentially saying, Hey, here’s this update. We want you to be aware. Correct. FYI, it’s not asking them for permission. It’s not letting them know that, you know, we’re going to physically hand them 20 bucks extra cash if they pay more. It’s
Jill: 16:45 just not apologizing, that’s for sure. So, so this is an interesting, maybe parallel or example, there is a, the best falafel place in Chicago is a place called salt in its market. Ooh, I disagree. Okay. Oh no. By far it’s the best. I used to think that it’s, it’s tremendous. You need to go back to salt and smart. Oh, okay. A few years ago. And one of the things that made it the best was they sold falafel sandwiches for like two 50 like it was insanely cheap. And a few years ago they raised their price to like three 50 yup. And they had this big long letter on the door apologizing for how much their ingredients have gone up. And you know, we haven’t raised prices for a long time and blah blah. And what that basically did is it tracked my attention to the fact that they were screwing, I mean, yes, the two 50 it was, I had it, I had a smoking deal there for some years. Right. So $5 now I know it’s crazy.
Brad: 17:39 It’s just you hand over a five and you have the biggest falafel sandwich in your life. Just shout out to falafel G I think it’s in Riverside, North Riverside, Illinois.
Jill: 17:48 Well that would not be the best falafel.
Brad: 17:50 It’s in Chicago land. I’m talking about the city. I don’t care. I don’t care because it’s the best hummus you’ll ever taste in your life. And I don’t care Brad and you wrong. And in fact, actually not far, maybe like a 20 minute walk from Selten’s. He is a place on division at Damon and I can’t remember the name right now, but it’s far superior. I know. I’m just letting you know when you come to Chicago to hang out with us, uh, there is a place, I’ll try to remember the name. It’s called shawarmas garden. And by the way, none of these places have paid us to say, but it’s so good. Anyway, sorry. Carry on. Carry on. Do you have a favorite falafel place?
Jill: 18:31 Eight seven two seven eight, seven, eight.
Brad: 18:33 Let us know when your city, cause we can do a hummus tour, breaking down your business, falafel and hummus tour.
Jill: 18:38 So getting back to the point, that is the point. When you’re raising your prices, the first thing you’re going to do is you’re going to, you’re going to envision a significant price increase. Not a 5%, not a 3% we’re talking about 2025 is double it, double it, double it. I like it. The second thing you’re going to do is you’re going to go sell new clients at that new price. Correct. Sell new clients at the new price. Get comfy. Yes, exactly. And when you’re doing that, you’re listening. How many people are actually saying, I’m not going to pay that price because I think the answer is going to be none. Right? That’d be one. Sure. So let’s talk about that briefly. When someone says, wow, that’s a lot of money. What do you say it is? That’s right. It is a lot of money. Oh, is that a trick question? No. Most people you want you want to say is yes it is. That’s a lot of money. And then you shut your mouth. They need to say the next thing after that, which normally for you is, well, all right, I guess we’ll do that. Right?
Brad: 19:43 Or they’re going to give you all of those excuses. I’m to think about it. Let me go talk to my spouse, let me go have a chat with my toddler. Sure. You know, and they’ll come up with some.
Jill: 19:53 And when you’re doing that, just out of curiosity, what are the other solutions that you’re thinking about to solve this problem? I like it, but what? What other if, if, if you’re not working with me, what are you gonna do? Right.
Brad: 20:07 Well that’s, that’s, I think that’s somebody’s first reaction out of fear that now their pockets are going to be slightly more empty. Sure. So they just might need a moment and you don’t need to fill them with anything. Right. Thanks so much. Let them go for a minute and they’re going to wake up the next day and go, you know what? That’s great. Good for him.
Jill: 20:24 That’s exactly right. So number one, you decided on a significant price increase. Number two, you sell it to new clients. Number three, you make an effective date sometime in the future, and we’re not talking about six months in the future, we’re talking about one to three months in the future, or if there’s a holiday, it could be for sure. Number four, you’re going to sit down with your clients or send them an email depending on which is more natural and you’re going to inform them that because of the tremendous value you’re offering, they’re going to be paying more in the future. It’s a fact. It’s a fat apology. It’s a fat, it’s not a negotiation. It’s a fact that your choices are to pay the new price to quit, to complain about it and still pay the new price or to finish up our work together, but pay me by the date of the new pricing for it’s fantastic choices for folks listening.
Brad: 21:16 If you decide to do this, and the answer should be, of course I will, Jill and Brad, you should call us at (708) 872-7878 you can call us and leave us a message or text us and say, I’m going to do this by this date so we can hold you accountable
Jill: 21:31 people to do that. That would be amazing. Yeah.
Brad: 21:33 But I also want you all to call us and let us know how elated you are once you do it. Because I can’t tell you how happy you’re going to be. You’re gonna be so happy,
Jill: 21:47 or you just want to reinforce your confidence. If you don’t want to anchor advisors.com/how to raise prices without losing clients, their dashes between all those words. So how that two dads raise that plant, you crushed it.
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