Reader question 1

Reader question 1


Question:

I started a business a year ago doing electronic claim filing for physicians. I am being paid less than I anticipated in my business plan because I just wanted the account. Now I need to hire an employee but cannot afford to pay one. Any suggestions?


Answer:


Many contractors just starting out price their services low to get business. I did it, too. Actually, it is a good strategy because you got customers you might not have otherwise. However, these people know you gave them a good value. Now that they know your capability, they should be prepared to pay the fee you need to keep the doors open.
Tell your clients that you appreciate them having confidence in you early on, and now that you have an organization, from which I assume you can develop some benefits for them, you must raise your prices a little. They all have raised their prices, so they will understand. If you develop a features/benefits presentation, you can tell them that they have helped you to succeed and grow, remind them of why they do business with you, plus you allow them to take pride in participating in your success. I predict they will like that feeling.
This is important: Don't just raise your prices. Make sure you develop a pricing strategy that makes sense for your operational goals and that you can justify to your customers.
You will likely lose some customers. It happens. Don't worry about it. The increased revenue from your new prices will replace the lost revenue. Also, the new customers you bring on will not know that your new prices aren't the old prices. Now that you have a track record, you are worth more.
Here's another thought: Develop new pricing for your old customers that is lower than your new ones. In other words, if you are raising your prices $10 an hour, only raise your existing customers $7.50. And tell them that they are getting a discount because they were your customers before the increase. They will like that, too.
I hope this helps. Please let me know if there is anything else I can do to help.