4 Clear Signs It’s Time to Raise Your Business Prices

With all the various parts that go into running your business, we understand bookkeeping can oftentimes be the most stressful. There are many moving parts and getting your business to the point where they work together in harmony does not come easy. This added stress does not help business owners tap into their creativity, which is needed to create new products and to expand their business. How do we provide you with the necessary information to grow your business without adding to your stress? We start by identifying the problems and offering practical solutions. In this article, we will be discussing red flags that may hint there is a problem with your pricing. As you read this article, take note of whether your business identifies with any of these statements. It could be a red flag that it is time to increase your business prices.

You Have Trouble Turning A Profit

Profit is not always guaranteed, but it is something we are striving for. If you find you are not turning a profit with the sale of a product, whether it is a single sale or over time, this may mean you need to increase your prices.

Admittedly, when it comes to turning a profit there could be a few problems at play. You may be struggling to become profitable due to high expenses. This can be particularly challenging if you are selling goods—especially if you have a high amount of startup costs or overhead expenses that you need to cover.

If you find that you are struggling to make a profit and your expenses are low, then consider increasing your prices. To do this, we would recommend calculating how much you would need to increase your prices to break even. Then, consider your industry averages and what your profit margin percentage should be. This should be a starting point.

You Feel Underpaid

It is understandable that in the early days of your business, you were not generating enough revenue to pay yourself what you prefer. However, over time your income should increase and more accurately reflect the work you do. If this is not the case due to a lack of funds, then it may be a sign you should increase your prices.

It is also important to note here we understand there may be other reasons you feel underpaid. Maybe with any profit, you would prefer to reinvest that revenue back into your business. This is a great intention, but over time you may find yourself feeling burned out and resentful towards your business.

You deserve to be paid for your hard work. Let’s make sure low prices are not the reason you don’t get to enjoy payday.

Your Customers Return For The Price

There is certainly room in every market for discounted products. However, if you are having to sacrifice the success of your business to obtain these customers, then it may not be the best strategy.

Consider these questions:

• Will your current prices help you achieve your financial goals? 
• What are you sacrificing by keeping your prices low?
• If you were to increase your prices, what would the future of your business look like?

These questions are not meant to be rhetorical. These are conversations you should be having with your accountant. As you discuss the possibility of increasing prices, seriously consider the relationship you have with your customers.

You’re In High Demand

If your products are in high demand but you are not profitable, this is a sign you should be increasing your prices. Like our last point, consider what would happen if you were to increase your prices. You may lose some customers, but certainly not all. 

This could help you become more profitable by doing less work.

This is especially true if you have a unique product that you create. These sorts of individual products should have more premium prices to reflect the work you put in. Typically, we recommend increasing these prices once per year.

We understand increasing your prices sounds like a risky strategy to grow your business. But if low prices are keeping you from hitting your business goals, then something needs to change! These red flags are just a starting point. Other factors like how long you’ve been in business, expenses, and even the time of the year can all play a part in pricing your products.

This is why we recommend working with an accountant. It is challenges like this that make accountants so valuable. The numbers tell a story, we just work with them to make sure the story is clear to you, the business owner. Then, you can make the right decision on how to move forward. 

If you are ready to understand your business’s story better, schedule a consultation with us below.