I want to increase my unsustainable price-point. How do I do this for existing customers?
After a year trading as a product photographer, I realize my price-point is unsustainable. I'm not so concerned with lifestyle quality, but more the danger facing my business; I can't afford repairs for my equipment, upgrades, replacements, etc.
I have increased my rates for new customers who accept those prices. I'd appreciate some advice on how to increase my rates for existing B2B customers. My service is a tax-deductible business expense for customers.
I allways insist in the factura that you can add value to your product or service to be able to transmit to your client that he getting good revenue for his investment.
Have an honest and reasonably transparent conversation with your customers about your costs and need to lift your charges to them. I am not saying that you should open your books to them, but be prepared to at least give them a high level view of your current unsustainable situation. Give them clear communication and tell them when prices will go up. If you have added any additional offering or gained any additional qualifications recently, that might also help justify the price uplift.
All this assumes that you have done market analysis to prove that you can still compete at a higher price. If not, then you really need to squeeze/reduce your costs. Good Luck G
I know it is easy said than done. Existing customers do protest to a price increase and try to bully the small business. I have faced such issues at the earlier days of my career. However we were able to convince most of our customers by presenting the cost break down. They all appreciate cost of production increases with inflation and if your quality of product or service is good and consistent they get documentary support from your price break down report to justify to their audit department as the reason for the price increase granted. So please do not be afraid give justification for the price revision and it should be accepted by your customers. Good Luck.
Having done business for a year if you think it is imp to raise your price , then you must. However, as you say it is selective for new customer only I think that will let you down because when the notes get exchanged between the customers it would be considered as cheating by those few who are your new customer. Therefore it is imp for you that you are not over charging those few who have come to you with lot of faith. It is imp to set a price considering that you can't cheat yourself therefore ensure that you are fair to all your customers. They would pay if your product/ services are good.
Increase should be able to sustain the business and you be in a position to run it with cumfort.
In addition to Jocelyn's 3-option quotes or offering Good, Better, and Best quotes/pricing, come up with new products/services that you can either include as a bonus/value, sell as add-ons or up-sells for more revenue.
If a service becomes commoditized you have to differentiate it at a higher level and increase the value and/or perception of it. You don't do that without changing something and usually it needs to be enough of a change to hold off more commoditizing for a while.
Technology keeps trying to eliminate the human element whether we like it or not. So potential commoditization is never eliminated. But the one thing computers can't do well (yet) is think like a human. So you might want to think about what to emphasize in your process/approach/thinking to show how it can't be easily duplicated within the constraints of a given project.
Add value by considering what your clients buy or use before and/or after your service or something related to what you provide that they might normally handle themselves. You doing any of those for them as part of your services or as an add-on fee might make their lives easier and justify price increases.
Also consider partnering with other businesses and white-labeling add'l services - or use an affiliate/reseller agreement. Many gas stations added snacks, drinks, and food to differentiate and attract customers. Some have partnered with fast food. Best Buy has Geek Squad, but didn't start out with any tech support services.
Value differentiation is the name of the game. You can't excel and maybe even survive for long buy doing and saying the same things as your competition. Clients have too many alternative choices and alternatives and know it.
Also consider your 'positioning' Are you always available? Will you take on any type of project? Do you specialize in anything? Any niches? Do you promote and market to anyone and everyone?
Your positioning plays into your ideal target market and how you are valued by that market. Don't confuse that with how you are valued outside of that target market because that's of little relevance. Customize your marketing messages to each specific market and avoid generic generalizations. Speak to the needs, pain and problems each target niche wants help with. Solve those problems and your price isn't so much of an issue.
If you just want to be a photographer and do nothing more to compete at a higher level doing the above or something else, your choices are limited to the other suggestions here. Many small business owners aren't really that, they are self-employed employees who have what is really nothing more than a glorified job with even more responsibilities.
I was a graphic designer/illustrator in a past life and hit a similar wall to what you are facing. In addition to pricing issues it was a little different in that I was challenging the graphic design industry as to why so much of what it produces gets used as marketing solutions.
Graphic design is a subset of marketing and should be guided by marketing. But so many businesses hire a graphic designer to do what a marketer needs to guide a designer to do. It's like businesses that have their salespeople do lead generation, too. It just makes it all so much more difficult and inefficient and costly.
I morphed after realizing the key is to be a better marketer than the person who does the hands-on work. If anyone can do what you do, or close to it, you need to focus on the business-building and marketing of a photography studio/service and less on the camera operation.
When I want to do graphics, illustration, animation or something of the sort, I do it for my self or my businesses. I can hire people to do the work I need done at a lower price/fee than what I want to get paid to do it myself. So you might want to consider hiring staff to do the grunt shots or boring stuff and focus your energy on building and marketing the business - limit your photography to the more creative, higher paying work.
Aside from all that, you might also work your marketing and PR magic to increase the perception of your exclusivity and special skills and then focus specifically on the high-end clientele that pay for 'celebrity' photographers. Keep your lower-end photography with staff photographers as a Plan B in case your Plan A slips or falls.
How do you promote your services? How targeted are you and how often do you do it? I have a tip I don't reveal publicly (usually reserved for clients) but if you make contact I'll share with you a way to more effectively increase client acquisitions that very few photographers are using. I also have some recommendations for your web site to generate more leads if you're interested.
As for the tax deductible aspect, make sure that is communicated from time to time and maybe figure out a way to blend it into your marketing/sales conversations. Since it's not a secret, you might not want to push it out there publicly, but instead keep it for face-to-face or phone conversations as needed.
There is no perfect answer other than to out-market your competition and bring in more of your ideal clients. Always be marketing to balance out attrition - otherwise you'll end up stuck with at least a few clients you'd rather turn away and hate yourself for not being able to let he revenue from them go.
Since these clients are businesses, you might consider discussing it with them in the context of what they are doing with their own prices. If you find that most of them are holding off on price increases to maintain market share, you may have a harder sell. That kind of discussion may give you the opportunity to customize the services so they get the most value for the money they spend with you.
One side note. If your lifestyle quality is suffering, the price is unsustainable. You may make short run trade-offs if you have a plan in place for the longer term, but that longer term plan has to include your personal quality of life in terms of income, personal time, etc.
I faced this exact dilemma many years ago. When starting my business. Once I had reached full capacity (my time) I realized I wasn't making enough money. I had already diversified my charges and was charging newer clients sustainable fees. I did increase my base fees for all clients. Some accepted and some didn't but in the end the growth in my business at the premium end of the fee scale more than compensated for the clients I lost.
My advice to all new start up's now; is use sustainable pricing from the start. That doesn't mean you can't give discounts to win new business and market share but then at least your customers will understand their costs for the second order from the very beginning.
These are great recommendations. One other thing to consider is to use the new prices as an actual promotional opportunity. Announce to you existing B2B customers that you will be increasing your rate on XX date. And for their favorite clients, you are offering them a special Bundle or Package. This gives your previous clients the opportunity to "lock-in" the old rate for a few months or a way to ease into the new rates. This package might include an upfront retainer (several month paid upfront) at the old rates; give just them an added feature/benefit at the new rate (that new clients have to pay extra for); lock them in the old rate for X months when they bring in a client at the new rate (referral reward).
Just recommending that you also see this as a positive marketing opportunity.
I would agree with my colleagues. If you are doing good work, raising your price should not be an issue. If you have published samples of works, you can get people focused more on Quality than Price. Price in any industry is bad game to play. There is always someone who will undercut you. However, have you considered putting out a Statement About "What You Actually Provide?? You are not a Photographer, you are a Memory Maker. Reposition what you do as helping people preserve memories.
Good luck! When I raised my prices - many of my clients whined and cried about it. If they don't want to pay, good riddance. Unfortunately, the value of web services of any kind varies from place to place. Where I come from, it's become a case of "show me the money" when it comes to offering services to those folks. They claim they just don't have the money for it, even though it could help their businesses. The majority of folks in my area want something for nothing. Or they just cannot afford what I'm offering.