EP 165: When Should You Raise Your Prices?

necessarily bad advice. I certainly think that in many cases, raising your prices is probably a good idea. However, if that person is not taking the time to help you understand why your prices need to go up, or in what way, raising your prices is going to work for you in your particular market, and to meet your needs, and your expenses and all that sort of thing. It's just sort of general fluff advice. So So you have to kind of proceed with caution when you

get advice like that. The other thing that I feel really strongly about when it comes to pricing is that much more than just your bottom line, like what you charge. I think that the way that your pricing and your pricing strategy aligns with your overall business model, is really what's going to indicate whether you are set up for success or not. I think that a lot of people look at a photographer who charges $2,000, and a photographer who charges

$1,000 for the same thing. And they assume that the one that charges more is making more money is more successful, you know, knows what they're doing. None of those things are true, I have seen so so many examples to the contrary, were the people who quickly ratchet up into these high price categories. And do so without a sort of smart plan for how to do that, and how they're going to connect with the right clients and all that sort of stuff. It can be its own sort of special recipe for

disaster. So if you have been toying with the idea of raising your prices, number one, I'm sure that you have a reason, right. And I'm sure that that reason is valid, there are lots of good reasons to raise your prices. However, I want to caution you because even when raising your prices is the right thing to do. It does require some thought and strategy to do it. Well. Just like there's no one size fits all pricing solution. There's also no one size fits all plan for

increasing your pricing. So today, in lieu of giving you a one size fits all plan, I'm going to give you five things to consider when you think it's time to raise your prices that will hopefully help you work through that process with a little bit more intention and set yourself up for success. Welcome to this can't be that hard. My name is Annemie Tonken. And I help photographers run profitable, sustainable

businesses that they love. Each week on the podcast, I cover simple, actionable strategies and systems that photographers at every level of experience can use to earn more money in a more sustainable way. Running a photography business doesn't have to be that hard. You can do it. And I can show you how. So the first question that I want you to consider when you decide to raise your prices? Is Why Why are you raising your prices? To begin with? Is it because you are currently not

profitable? And you need to become profitable? Is it because you are profitable, but you would like to make more money? Or is it because you are profitable, and you want to buy back some time, it can be a combination of those things. But it needs to at least have one driving force behind that decision to raise your prices. So this one shouldn't take a whole lot of time, you can just sort of go with whatever comes to the surface first. Like I'm not profitable, I need to get

there. I you know, I'm just looking to make more money or I am in a point in my business where I'm so busy. I need to charge more so that I can maybe start to outsource some things or automate some things. And in order to do that I need to make more money with each session that I book or wedding that I book. Question number two is Do you know how much money you need to make per session in order to be profitable? So this is like the big money question, right?

Have you run your numbers? If you haven't run your numbers, you just hit timeout and you gotta go do that. I know it's not something that people love to do. If you have done it in the past, but you haven't done it for six months or a year or more. It's time to do it again. You want to have a number. I call it your MSA, your minimum sales average, which is just a single number, where if you make that much or more with each client that you book, then that client is turning a profit for

you. And if you don't make that much, then you're not profitable with that session, it's such an important number to know, it's such an easy number to know, because then it makes the decision of like, is this job worth my time? A very easy decision. So there are lots of ways to calculate profitability, you could say like, I need to make this much per year. That's a good number to know, too. But that doesn't help you get really granular when it comes down to like, Okay, but what am I

charging per session. So I like that MSA number, because it just helps you base your pricing in a way that you know, whether your books are full or not, you at least know that once you get to the place where you're booking as many clients as you sort of want to book your goal number, then your business as a whole

will be profitable. And in the meantime, you can perhaps pad that, you know, if you're new in business, and your goal is to shoot 100 sessions a year, and right now you're shooting 75 sessions a year, maybe you you know, take on some work on up work or something like that you do some editing for someone so that you can fill in the gaps until you're able to book more

clients. But before you're able to calculate what you need to do to raise your prices and be profitable and all that stuff, you have to know what that number is. So, again, question number one is why Why are you raising your prices? And that you can answer very quickly, this number or this question takes a little bit longer to answer running your numbers. If you don't have that number, take

the time to do it. Calculate your income, calculate your expenses, your average expenses, all those kinds of things, and shuffle that out so that you understand what your per session profitability number is. The third question that I want you to ask yourself is whether your current pricing is allowing you to consistently meet or exceed that number that we just calculated when we ran your numbers. So if your MSA is $1,000, is your current pricing setup so that you are consistently meeting or

exceeding that number? If the answer is no, you are not currently meeting or exceeding that number, then you have kind of a secondary question to address. And that is, what is your ideal business model? Is your is it just that we need to increase your per session pricing? Or are you potentially in a place where you would like to, instead of increasing your pricing, just increase the number of clients that you take

on per year? A lot of times I'll talk to people who are saying, Well, I'm not making enough money, I'm not making enough money, I have to raise my prices. Many times that is the right answer. Because we don't have an unlimited amount of time during which we can take on more clients. But there are, you know, there are more than one ways that you can solve this particular problem. So you can add more clients, you can raise your prices, or you can do a combination of those two things.

So you can kind of tweak it so that you're in a place that you're comfortable. Because what I see is a lot of people running their numbers, saying, Okay, right now I'm charging $500 a session and I need to charge $2,000 A session, and they get stuck because they freak out. And they say there's no possible way that I can charge $2,000 for a session. And I'm going to leave that conversation for your

therapist. But the but the fact of the matter is that if you are not willing to charge $2,000, no amount of like running the numbers is going to make that work for you. You need to figure out a way to make your business model work around what you're comfortable with. So if you're uncomfortable with raising your prices to 1250, then you need to come up with the math that tells you Okay, well, I need to take on this many clients, can you do

that? Yes, great, wonderful, we found a middle ground that's still profitable. So if your current pricing isn't profitable, then you have to do this, you know, minimum sales average versus number of clients equation and come up with what works in your business and for your needs and values to get you to the profitability finish

line. On the other hand, if the answer to this question of whether you're currently profitable is yes, then my secondary follow up question for you is what is it that's making you consider raising your prices in the first place? This is getting back to that, why? Why are you raising your prices? So in this case, it's not just to kind of baseline get to the profitability part but really, like where do you want to go

from here? Are you looking to make more money overall, but you're happy with how much work you're doing? Is it that you want to take on less work and do less work but make the same amount of money? Or do you want to kind of have your cake and eat it to where you're making more money and taking on fewer clients? This math works in both

ways. So if you are currently profitable, you should still be intentional when it comes to you Building and fostering your business in a way that feeds you not just by, you know, putting food on the table money in your bank account, but also lights you up makes you feel great about showing up for work in the morning. So you need to before you raise your prices, think about like, are there other tweaks that I want to make in my business as I raise my prices?

My fourth question for you is, do you have a plan for how to raise your prices? Now, obviously, there's just the nuts and bolts of like telling people, these are my new prices, or like changing your price sheets and all that sort of good stuff. And that's fine. But I want you to kind of think through what is how are you going to explain this to people.

Now, there's nothing to say that you need to explain a price increase to anybody, a lot of times your contracts going to say like these prices are subject to change, people understand that prices go up over time, you do not need to feel obligated to give people a big warning about like, Oh, I'm raising my prices, however, you want to think these things through before you actually make the move. So one question I want you to ask is, what value are you adding that corresponds to

your price increase? Now, you don't need to add value, it may just be that you've run your numbers and come to the conclusion that like, I'm charging, $500, all inclusive, it's not profitable, I'm gonna bump it to 750, all inclusive, no explanation necessary, you're just doing the same thing, you just charge more for it totally,

totally fine. However, if as part of your price increase, you are doing something that adds valuable, you know, goods or services for your client, then you want to be really clear on those so that you can communicate them. When you increase your prices significantly, you are going to lose some of your client base, that's just kind of a general fact, people hit their budget limits, they you know, are sort of stuck mentally on your old

pricing. And when your prices jump up, the bigger the jump, the more likely they are to kind of jump ship, that's all fine, it's part of business, it's totally not a judgment on your character or anything else. However, giving them some kind of rationale about like, I'm increasing my prices, however, I've got this new system to you know, that's going to create a great experience for you, or I'm introducing products, and I'm so excited about it, blah, blah, blah, that can actually help you

retain more of your clients. And the reason is that you are giving them psychologically, a like a rationale that will help them rationalize their own willingness to spend more money to continue working with you. So if you are adding value to your services, or your products or anything else with the price jump, you want to know what that is so that you can communicate it. Number two, how do you plan

to announce your price jump. And again, you don't have to, you don't have to tell anybody that your prices are going up. However, if you've got long standing clients who come back, you know, every year, every couple of years, whatever, a price jump, especially a big one is it's an event it will you know, they'll find out about it sooner or later. And in some ways, you can be smart about letting people know that the

price jump is happening. So that a they don't feel blindsided when they contact you and be you can give them the opportunity to book before your prices increase. If you are not raising your prices, because you're overwhelmed with work, you know, if you're in a position where it let's say that you're relatively new in business, your initial prices that you set up weren't high enough and you're realizing that now and you're like I need

to raise my prices. But I'm I'm not even really all that booked right now. So you know, I'm gonna go from not being very booked to really not being booked, you've probably got some motivation to kind of pad your your wallet a little bit before the the wall that comes after you introduce this price change.

So in that case, it's a really smart thing to send out a series of emails being like, hey, just so you know, on February 1, my prices are increasing and they're going up to you know, this contact me now, if you booked before this time and schedule your session before this date, I will honor my

current rates. That's a great way to just kind of like stuff your calendar a little bit, get some build some goodwill because people will feel like they're getting a deal now that they know that your prices are going up. And it it just helps bridge that gap. It also gives you an opportunity to reach out to your clients which if you are in those beginning in that beginning phase of your business and you are looking to have reasons to reach out and remind

people that you're there. This is a great reason to do that. The third thing you want to ask yourself is how much time are you able and willing to give your new pricing to kind of take root So I always suggest that you mentally prepare for a big price jump to take about six

months to settle out. And what I mean by that is, when you go from again, we'll say $500 to $750, that's a 50% price increase, and you will lose some traction in the market, the people that you were speaking to before, may not be the same people that you are speaking to now, with your messaging with everything else. And so it's going to take a little while, before you're consistently

getting booked. Again, you're gonna have to kind of practice how you're going to pitch it, you know, what you're going to tell people, all that sort of stuff. And that takes time? Where is your bank account? In the meantime, like, are you coming up to this price increase from a place of desperation, where if you have two or three phone calls with prospective clients, after your new prices take effect, and they none of none of those two or three hire

you? Are you going to immediately freak out and go back to your old pricing? If that's true, you need to come up with a plan because two or three people is not enough to test a new price point. In fact, I would say that like until you get to 20, or 30 New inquiries that are just like, No, no, no, no, no, you don't really know how it's going. Six months, I think is a really fair amount of

time. And if you can financially prepare, and maybe even more importantly, mentally prepare for some rejection in that period of time, and you tell yourself, it's okay, we're gonna get through this, I need to get to the other side, this is just part of the process, you have to kind of do some coaching for yourself, so that you have the fortitude to get through the price increase. And that's just sort of part of the game.

Another question is, if you're going to make that large jump, during that three to six month period, do you have a plan for how to get in front of those new clients. So if you're marketing to people who, you know, they top out at a $500 budget, and all of a sudden your prices are $1,500, you are going to need to find new people via Instagram, you may need to rebuild your mailing list or find new people

for your mailing list. How are you going to get in front of the people who whose budget is a totally different place than the people that you've been talking to in the past? And finally, do you know how to sell your work at your new prices, a lot of landing the sale or you know, booking the client or whatever you want to call it, a lot of that comes down to your ability to demonstrate confidence in what you offer. And part of what you offer is your price point.

So if your voice is shaking when you're talking to somebody about your new prices, or if you're doing that, like oh, well, you know, I know this is really expensive. But data, if you're talking like that, you're not going to be commanding a lot of confidence. And that's okay. I mean, there's no judgement here, it is hard to make a big jump. And it can be really nerve wracking to tell someone a new price that you have never asked for before.

However, you kind of want to get there at least a little bit mentally before you start trying to sell it because it until you're comfortable with it. Other people aren't going to be comfortable with it either. Finally, I'm doing all these sub questions. So I was like, Oh, I'll ask five questions. But there is a lot to consider. Hopefully you're following along here. Thus far. Just to recap, we talked about Why are you

raising your prices? Number two was Do you know how much you need to make per session to be profitable? Number three was, Is your current pricing helping you consistently meet or exceed that profitability number? Number four was Do you have a plan for how to raise your prices? And that brings us to number five, which is what makes you nervous about raising your prices. So again, this kind of goes back to the mindset thing. Everybody's a little bit nervous about raising their prices, you know, is

anybody going to hire you? Are you just going to sit there with a silent phone? Is this going to fail, all that sort of stuff? Generally speaking, I think that this nervousness comes down to one of two things. It's either your fear of losing clients, or your belief that no one is going to pay this new rate that you're charging. And the only thing that I have to say about this is really that before you go changing your prices, you really have to work on changing your

mind. I think that a lot of this comes back to knowing your

numbers. So we go back to number two, like if you have run your numbers and you know what You need to make in order to be profitable, or, and or if you are profitable, but you want to charge more, you need to be super clear on your why, like, What is your reason here, those two bits of information are going to make it so much easier for you to talk about your new prices, display your new prices, not feel like you've got impostor syndrome or anything else, when you are clear on what

you need to do in order to achieve your goals and be profitable, and feed your family and all those kinds of things. It's much easier to just say, This is what I charge unapologetically. And if someone questions it, or says, Wow, that's a lot more expensive than, you know, Suzie Q down the street, you can say very graciously, and very professionally, that you absolutely appreciate their position. And if you know their circumstances change in the future, you would love to work

with them. That person has a different price point. And that's fine. You need to make this in order to achieve your goals. And and there's nothing to apologize for about that. So hopefully, these five things to think through have given you some good food for thought I know that this can feel a little bit daunting. It's not what I

mean for it to do. I just think that a lot of people kind of go through this period of resistance where they're like, I don't want to raise my prices, I don't want to raise my prices, I don't want to raise my prices. And then they hit a wall where they're like I have to, and then they do without thinking through some of these other things. And then they very quickly circle back into this like, well, I guess that failed. I can't do it, you know, and it just sort of perpetuates the raising your

prices feels impossible myth. So I'm here to dispel that. And if you ever want to chat more about it, I hope that you will DM me or join our conversation. In our Facebook group. The this can't be that hard Facebook group is free. It is. It's open to photographers, I do ask that you apply to join just so that like your clients can't look over your shoulder while you're while you're chatting. But it's a very

supportive group. And we have lots of great discussions about things like pricing, mindset, all that sort of stuff. So if you aren't already part of that group, join us over on Facebook at groups slash this can't be that hard. Hope you guys have a great week. Well, that's it for this week's episode of This can't be that hard. I'll be back Same time, same place next week.

In the meantime, you can find more information about this episode, along with all the relevant links notes and downloads at this can't be that hard.com/learn If you liked the podcast, be sure to hit the subscribe button. Even better, share the love by leaving a review in iTunes. And as always, thanks so much for joining me. I hope you have a fantastic week.