Your Service Pricing: Get Ready For the Recovery

How to price service during recovery

How to price service during recovery

Are you trying to survive the recession by lowering your prices, adding free stuff, and bending over backwards to please the customer so you can keep them? You are not alone. Let me ask you this. When will it stop? How will you stop it? Have you been planting the seeds so that you can stop giving away your time, energy, and expertise? Does your services price list even have your “desired” prices on it?

Take these steps to get ready to raise your service pricing as the economy improves, and prepare your clients so they’ll value you more and happily stick with you.

1.  Make a list of all your current services and your ideal services price list. Give each item a specific service price. This list of service prices is NOT to be given to customers; this is your own secret pricing of services you believe you should be charging. Call this list “Primary Service Prices List”. Use the prices for services you should be charging, not the discounts you are currently giving due to recession, fear of losing the business, self doubt or whatever makes you undercut your own service price list. Think of this list as what your service pricing would be if you were not afraid to lose the business.

2.  On a separate sheet list those services you have been doing for clients but doing for free. Call this list “Additional Service Prices.” Keep adding any services that clients ask for, but don’t charge because you “don’t want to nickel and dime” your client. Also include items you routinely do but have never specifically priced.

For example, one of my commercial cleaning clients is frequently asked to:
Change light bulbs
Put up window screens
Dust air ducts
Dust plants
Put away holiday decorations
Clean up after parties
Initial ‘extra’ cleaning to bring rooms up to standard

On this Additional Service Prices List, start adding the prices for services you think should be charged. Again, this is your own private pricing of services, so don’t worry about how to price services in the best way just yet. Just keep adding distinct services to the list and assigning them a price. If it helps, estimate the amount of time for each item.

3.  Change your proposals.  Be specific in your prices, services, and delivery specifications. Build a clear checklist of what each primary service entails. You’ll then be able to point out when the client has asked you for an extra service. That’s because that service won’t be on your delivery list and will be on your Additional Service Prices List.

4.  Begin believing that this recessionary era of “free” will soon be over. This is a change in your thinking. Look for evidence of it. You’ll find it. Remember, what you think the service is worth (and ask for) is what clients think it is worth.

5.  When a client asks you to do something on your Additional Service Prices List, your response should always be positive. Say, “I’ll be happy to do that for you Sally. Our price for that is $75. Would you like me to add that today or schedule that for Tuesday when we work with you next time?” If you don’t have the courage just yet, say something like, “Normally we charge $75 for that but since you are such a good customer, I’ll add it this time.” You’ve now begun establishing the value of your services. Listen for feedback.

6.  Tell your clients when you are giving them something free. Put those items in your invoice with their new normal service prices, but begin listing them as “no charge”. You’ve been giving them something of value; you want them to see it.

7.  Now start adding an end point to all these free and cheap service prices. When providing a free service, add “30-days free” or “6-months free” after each item. That way, you’ve started to tell the clients what the end date is.

8.  Practice adding in those new service prices and charging for those items on the Additional Service Prices List. Add these service prices to your proposals, and in your response to client requests. Further, begin suggesting these services as you see your clients need for them. You will be adding value and making helpful suggestions. Don’t wait until all your competitors have raised their prices or started adding these services. While you may be afraid to be first, be more afraid to be last.

Notice how changing your service prices are a lot about the way you are thinking? So don’t give up at the first sign of resistance.  Tell me what you’ve been giving away for free in your comments.

Now stop reading about how to price your service and start doing! Let’s create your personal profit strategies for growing profit. Call small business profitability coach Merra Lee Moffitt, CFP®. She can be reached at 888-920-2030 or by email at

Your Service Prices – Raising Them in a Recession

So you thought you’d be generous to your clients. Or maybe you were just too busy last year to do the work necessary to raise your service prices. Now with costs going up and sales going down, you just want to kick yourself for missing the opportunity. Don’t despair. It is possible to raise your service prices even in this economy.

Here are a few ways to raise your service prices in a recession.

Raise your ‘grandfathered’ prices. We each have clients who’ve been charged the lowest possible billing rate because they’ve been long time clients. Their billing rates can sometimes be half the rate of our new clients. We love these clients and want to keep them. You can raise these service prices with still a sizeable discount to your new service pricing. Just tell them that their prices have been so much lower than your new clients that a small increase now is still significantly less than what you charge new clients.

Raise, but give a returning client discount. One way to make a services price increase more palatable is to raise the prices for the NEW customers only. You then tell your existing clients that you are raising prices, but that their cost will remain the same for 6 months or a year. That way, they’ll feel like they got something extra, but will have been forewarned of an upcoming increase.

Don’t rescind those gas charges just yet. It may seem silly to keep your recently imposed gas surcharge when gas prices have fallen 60%, but think it through. You probably should drop the charge for now, but be ready to put it back in place when gas goes back over $3.00 a gallon, which may be sooner than you think. By the way, if you missed the boat during the last gas price run-up, get ready because you’ll have another chance. Gas will go back up sooner than you think. You can gain brownie points by telling clients you’ve temporarily suspended your gas surcharge, which makes you a hero now, but forewarns them the charges will be back sometime in the future. That’s the hardest part of installing a gas surcharge – how to tell your clients. By the way, according to Angie’s List, 91% of service companies raised their service prices or thought about raising prices in 2007 as gas prices spiked. So don’t get behind the ball next time.

Travel time billing. In a similar vein, if your billing rates do not include travel time, now is a good time to institute it. You may decide to institute this charge when clients are greater than 1/2 hour away or more than 20 miles, for example. With online maps and GPS’s so popular, it’s easy to tell how far clients are before you arrive, so you can tell them upfront. With costs going up, you can add 1/2 price for travel time, or only bill for travel time one way.

You haven’t raised prices for several years. If it has been three years or more, use that as your rationale. You can be self-deprecating as you do it. Say, “I missed my opportunity to raise my service prices for the last 3 years, but with costs going so high, I really need to put in a minimal increase.”

Add a little extra. Your service price is supported by the value your customers perceive. If you add a new feature that people have been asking for, a price increase will go down easier. For example, adding a monthly activity report, a free screening test, extended hours or a technology backup will add value to your service. Be sure to pick items that cost you very little to give.

Keep your prices the same. You may ask, “How is this a price increase?” With the discounting pressures going on in this recession, when it seems everyone is lowering their service prices, holding steady can be a big advantage.

Schedule the raising – so clients have a time limit at the old price. As the recession dictates, you may have difficulty raising your service prices right this moment. But you can say something like, “Even though my costs are increasing, I’ll be able to hold off raising prices until June, so my clients benefit.” You’ve now done 3 things: 1) communicating to your clients you’ll be raising prices in a soft manner, 2) given your existing clients a reprieve which they will appreciate, and 3) given yourself a timeframe commitment for that increase you want.

Bundle.  Don’t give up. If sales are just too far down to justify increasing prices and you are sitting with a lot of extra time on your hands, don’t despair. Can you bundle two or three services people need and give them a service price discount on the whole? You would end up with a larger total sale than you would have gotten otherwise.

These are just a few of the ideas I’ve recently seen for raising service prices in this recession. If you want to discuss further, drop in a comment or call me. Of course cutting costs is another way to raise profits, but there are several recent blog posts I’ve written on that subject. If you haven’t read them, check out: A Cunning Cost Cutting System for the Busy Business Owner  or Cutting Costs Now: 9 Hot Areas for Creative Small Business Owners.

See also The Lowdown on Raising Prices.

Now stop reading about raising service prices and start doing! Let’s create your personal profit strategies for growing profit. Call small business profitability coach Merra Lee Moffitt, CFP®. She can be reached at, 888-920-2030 or by email at

“Seek new clients, seize better income, capture more profit”

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