Raising prices

Discussion in 'Cashflow forum' started by JBC88, Jan 5, 2017.

  1. JBC88

    JBC88 UKBF Newcomer Free Member

    1 1
    Hi im a newbie to the forum,

    I run a window cleaning service as a sole trader and I would like some advice regarding raising prices.
    In the past 4 years my costs have consistently increased and this year some suppliers have raised prices by 15%. Unfortunately i have not regularly increased prices annually so now im at a point where i must do so to run at a profit and provide a living. The problem is im not sure how much to raise prices by considering no increase for 4 years.

    How often do you raise prices and how do you decide how much to increase them by? Do you have some kind of pricing formula?
    Im interested to know how members in the same industry as me price their service but welcome advice from all members.

    Another issue iv found amongst fellow window cleaners is that no one seems to price accurately they just go by "the going rate" or what competitors charge of maybe 50p-£2 per window (depending on area of country).

    Many window cleaners dont run their service as a business and just aim to provide a living which is ok however i desire to run a professional business and expand so i need to make sure i have enough profit to invest in marketing etc and still provide a good wage.

    I want to try figure out the minimum i need to raise prices by but im also worried that if i raise them to steeply i will lose alot of customers.

    Thanks
     
    Posted: Jan 5, 2017 By: JBC88 Member since: Jan 5, 2017
    #1
  2. AppCo

    AppCo UKBF Contributor Free Member

    30 3
    I would be open with your customers about it and explain to them that your prices will increase - Set this as a date in the future and you can gauge how many customers you may lose, if you just say "from next week the price will be £xx" and that's a problem for 90% of your customers then you don't have much time to try and negotiate/go back on the decision.

    Saying that, if you aren't making money then going back on the decision may not even be an option.

    In terms of how to price it, I would say you need to be charging enough that you could pay somebody to do the job, and still have something left over to go into your pocket/back into the business. Otherwise you'll need another price increase when it comes to hiring more people as you expand as there are other expenses when it comes to managing payroll etc. for employees compared to if you are just working for/by yourself right now as a sole trader.
     
    Posted: Jan 10, 2017 By: AppCo Member since: Jan 7, 2017
    #2
  3. profitxchange

    profitxchange UKBF Ace Free Member

    1,704 192
    Try working backwards for some costings to at least give you an idea of where you stand. You work 8hours- of which x = cleaning windows = income; balance of time is travel etc = no income;.
    to live you need y£'s == I expect to pay any tradesman the equivalent of £300/day. for almost anything. See if you get anywhere near this. If not tray a different job.

    I find it is better to increase your prices in small increments regularly a client can't be bothered to find someone new for a few % particularly if they are happy with you.
     
    Posted: Jan 10, 2017 By: profitxchange Member since: Apr 16, 2005
    #3
  4. lesliedocherty

    lesliedocherty UKBF Ace Free Member

    2,148 293
    A guy we advertise with put his prices up for the first time in 7 years, he said a lot of his customers complained, his new price is still pretty good so i wasn't bothered and being a reasonable person i understood he had to.
    In the end, he didn't lose any customers, he explained his reasons, higher print cost etc etc and everyone got on board. This is a real issue if a high percentage of your customers are long term customers, with new customers the price is whatever you give them, so you can quote them what you want.
    most people are reasonable and understand that all prices are going up, you might lose a few and gain a few at the new rate, normally the ones that pay the least moan the most, not the worst thing to lose a few of these people is it.?
     
    Posted: Feb 2, 2017 By: lesliedocherty Member since: Jun 17, 2006
    #4
  5. John@WFinance&Accounting

    [email protected]&Accounting UKBF Newcomer Free Member

    4 1
    In an ideal scenario price increases should be done yearly to reflect inflation rates. If you don't you are effectively reducing your prices by keeping them unchanged.

    Changing your price 3% a year is a lot easier than 15% in one go after 5 years of stagnant prices.

    On the upside it will also make you more money.
     
    Posted: Apr 15, 2017 By: [email protected]&Accounting Member since: Apr 15, 2017
    #5