Summary of Business Pathfinder Podcast Episode: Ep. 21: Pricing Your Services
— Description —
Pam is considering hiring massage therapists for her company and evaluating her pricing strategy She currently charges $125 for a 75-minute massage and offers a package deal tailored to locals and workers To avoid providing services for free and expending energy without compensation, she needs to raise package rates
Kristin advises Pam to raise rates, communicate the increase to clients, and prioritize her well-being This is crucial for improving her bottom line profit margin and attracting a new level of clientele Pam is at a crossroads, deciding between continuing as a solo practitioner or expanding her business by hiring other therapists
She also recognizes the need to evaluate her current pricing strategy, taking into account the location and clientele she serves Long-time clients will be grandfathered in, but the rate increase should ideally apply to clients who have been with the service provider for a year or more Raising rates is essential for Pam to improve her financial flexibility and balance meeting financial needs with sustaining current client relationships.
Ep. 21: Pricing Your Services
Key Takeaways
- Pam is considering hiring massage therapists for her company and needs to evaluate her pricing strategy.
- She charges $125 for a 75-minute massage and offers a package deal, tailored to locals and workers.
- Raising package rates is necessary to avoid providing services for free and expending energy without compensation.
- Kristin advises Pam to raise her rates, communicate the increase to clients, and prioritize her well-being.
- Raising rates is crucial for Pam to improve her bottom line profit margin and attract a new level of clientele.
Revamp Pricing for Hiring Success
- Pam wants to do things differently and is considering hiring massage therapists for her company.
- The first step for Pam to move forward in a new direction within her current company is to explore her pricing and ensure it's in alignment with the ability to hire people.
Evaluate Pricing Strategy for Expansion
- Pam is at a crossroads, deciding between continuing as a solo practitioner or expanding her business by hiring other therapists.
- She is also contemplating a different career path, recognizing that she cannot sustain massage therapy indefinitely.
- Kristin advises evaluating Pam's current pricing strategy, taking into account the location and clientele she serves.
- Pam charges $125 for a 75-minute massage and offers a package deal of buy four, get the fifth one for $100.
- The pricing strategy is tailored to the local clientele, which primarily comprises locals and workers, rather than high-spending tourists.
Discounting Services Is Not Sustainable
- I'm not a proponent of packages unless it's just a small savings.
- This is a big savings for your clients.
- But it means that you're doing the same amount of work and you're discounting your services.
Raise Your Rates Now
- Raising package rates is necessary to avoid providing services for free and expending energy without compensation.
- Long-time clients will be grandfathered in but will still be subject to the rate increase starting on a specified date.
- It may not have been feasible to raise rates in 2020 due to the pandemic's impact on businesses.
- The rate increase should ideally apply to clients who have been with the service provider for a year or more.
- It is advisable for service providers to consider raising their rates, even by a small amount like five dollars.
Emphasizing the Value of Raising Rates
- Kristin Morrison emphasizes the importance of treating time and energy as precious resources in a service-based business. She encourages Pam to raise her rates, highlighting that it can lead to a renewed excitement for her business and potentially open up new directions.
- Kristin advises Pam to communicate the rate increase to her clients by emphasizing their loyalty and the special pricing they have been receiving. She challenges Pam's belief that helping people means charging a low amount, emphasizing that she can help people and herself simultaneously.
- Kristin highlights the impact of raising rates on Pam's well-being, suggesting that it can help her work less and make more money. She shares her own experience of raising rates and the positive responses she received from clients.
- Kristin encourages Pam to prioritize her well-being and sees the rate increase as a simple fix that can lead to a deeper love for her business and potential new opportunities. She emphasizes that raising rates can attract a new level of clientele who recognize the worth of the services.
Attract People with Value, Not Price
- People being drawn to you because of what you're giving them rather than what you're charging them.
- Playing in a new playing field.
- Thank you so much.
Raise Your Rates Strategically
- Raising rates is crucial for Pam to improve her bottom line profit margin and have more financial flexibility.
- It's important for business owners to raise prices regularly, but not more than once a year.
- When raising rates, the goal is to increase income without losing too many clients.
- The key is to find a balance between meeting financial needs and sustaining current client relationships.