Raise Your Prices
Over the weekend, my wife and I went out to dinner at one of our favorite local restaurants. As we approached the restaurant, the parking lot seemed eerily empty; in fact, there wasn’t a single car in the lot. We stopped in front of the entry way and noticed a piece of paper posted on the front door. Charisse ran up to read it.
This restaurant is always packed. Our only complaint about the place is that the food is so good, we sometimes have to wait a long time to get seated. The place is wildly popular, so I figured there was some quirky reason why the restaurant was closed on a Friday night. I was shocked when Charisse came back to the car and told me they were out of business.
“WHAT?! How could that happen?”
Then I thought about it. Not only does the place have great food, but it was very “reasonably priced.” For five years, we had been going to that restaurant, enjoying the food and silently wondering why our bill was much lower there than any other place we frequent.
Here’s the disappointing thing: Thousands of loyal customers right now are wishing they could pay an extra $5 or $10 per meal to keep that place in business. But it’s too late. The owners were unwilling to raise prices, for whatever reason, and now they’re out of business.
I wish I could say this is an isolated incident, but it’s not. Far too often, small business owners sell themselves short, afraid or unwilling to charge “reasonable prices” that will keep them in business and make them a profit. Don’t fall into that trap. If your business is struggling, it may very well be the case that you simply need to raise your prices.
SBS Idea of the Day: Determine at least three ways you could raise prices if you absolutely had to (across the board increase, high-end offering, lower quantity, etc.). Pick one of the three ways you listed and test it over a one-month period.
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