Ep. 114 How Retailers Can Raise Prices Confidently
One of my values for Savvy Shopkeeper is to empower shopkeepers—especially women—to pay themselves. Sometimes, that means kicking fear to the curb and raising prices in our stores.
There are a few common excuses I’ve heard women store owners use to justify keeping their prices too low. Often, women want to help and be good to people. Equally as bad is that we want everyone to like us, our products, and our store.
We tend to prioritize helping or people-pleasing over ourselves and our businesses. I know this. I talk about it. I coach shopkeepers through this. And I’ve even done it myself.
But the truth is, inflation is rising steadily. We’ve all noticed this in our personal lives, especially since the pandemic started. And as retailers, we can’t keep hiding from inflation and its effects. The more we hide, the more we risk hurting our businesses.
Signs You Might Want to Raise Your Prices
I never want to tell anyone they NEED to do something—that’s for you to determine! So if you’re happy with your pricing, your margins, and your overall profit, this might not apply to you.
- Feel resentment towards the customers who book your services
- Feel exhausted when you complete the service and wonder why you keep offering it
- Know you’re taking a loss or that the margin isn’t high enough to make it worth your time and effort
…then it’s time to raise your prices on your services.
- Have a low gross profit margin (under 50%)
- Feel like you’re drowning because your books show a consistent net loss
- Have a small overall net profit, but you aren’t paying yourself yet, and you’re feeling resentful about it
…then it’s time to raise the prices of your products.
How to Raise Your Retail Prices
You might have read those bullet points above and said, “Well, duh—when you put it like that, raising prices is a no-brainer!”
But the brain is an incredible organism, and it will often disguise what is really going on. Our brain will add layers of guilt or fear to protect us. We’re so consumed with these thoughts that we may not see that the simple solution is raising our prices.
So how can you go about raising your prices? Let’s find out.
Work On Your Mindset
If your thoughts are keeping you from raising your prices, then you’re going to want to work on your mindset first.
Work on shifting your thoughts from guilt and fear to empowerment and strength. This is something I often do in 1:1 coaching because our brains can be extremely stubborn. Breaking our pre-programmed thinking takes time and effort, but trust me, it’s worth it!
Increase Your Prices Gradually
Depending on your situation, you can slowly increase pricing.
For example, you might be using keystone pricing in your store. That’s when you multiply the wholesale cost of your products by 2 to find your sale price. Consider increasing that figure to 2.2 or 2.3.
I did this in my own store in the first few years. I realized our gross profit margin was significant and it needed to increase. We started doing this again over the past 2 years. And to assuage your fears, we didn’t announce these changes—and we haven’t heard any comments on it from our customers.
Increase Pricing Strategically
You don’t have to do an all-or-nothing price hike! Analyze your inventory to determine which categories or products should be priced higher.
If you’re a member of The Shopkeepers Lab or Master Shopkeepers, you’ve probably watched some of the available lessons on inventory management, categories, and/or turnover. If so, you know how valuable data is for your business.
Handle Price Increases Gracefully
Many shopkeepers panic and feel they have to make a big “prices increasing” announcement. But I’m a firm believer that what we dramatize, our customers will dramatize. Don’t feel the need to make big announcements.
This can vary depending on your industry and business type, of course. For example, I have a coaching client who is a hair salon owner. She prefers to send an email (ONE email) informing her customers when she raises her prices.
A one-time courtesy announcement is different from a panic announcement or an apologetic announcement. Apologies are meant for situations where we did something wrong. But we run businesses—and raising prices is part of doing business! You aren’t raising prices maliciously or to hurt customers, so an apology simply isn’t necessary.
Be Strong and Firm
You shouldn’t be rude if a customer notices your prices have increased and asks you about it. However, I do think you should prepare a strong, firm response in advance.
For example, “I was competitively priced for several years, but with supply chain issues and surcharges, a price increase was necessary.” Do not apologize, as this can open the door for negotiation or a conversation you don’t want to have.
Acknowledge Your Value
You and your business are worth it! You create money in your business by creating value. And value goes beyond the products you sell or the services you provide.
You provide value to your customers through…
- The ambiance of your store
- The excellent customer service you provide
- The kind conversations and safe space you give your customers
- The fun environment you create
- The beautiful branding in your store
- Your level of expertise and professional advice
All of the above matters to your customers! So stop researching online for the products you sell and pricing to compete. Many of our customers don’t bargain hunt because they see the value in shopping small.
For example, furniture flippers often feel guilty for charging 5-10x the retail value of furniture they garbage-picked or thrifted. But you can’t discount your effort, time, or talent. It all has value! Track your time, give yourself an hourly rate of $50/hour minimum, and you’ll see what the price really should be.
Remember: You Are Not Your Customer
If you’re a bit of a Frugal Franny, you might believe that people won’t buy if you raise prices because YOU wouldn’t buy at higher prices.
Here’s what Abby, the maker behind Abby Kate Home and member of The Shopkeepers Lab, had to say about this very topic:
“Once I realized that I AM NOT MY CUSTOMER, pricing has become much easier! It always surprises me what people are willing to pay not for just the item, but also shipping—especially overseas where they’ll often pay 2x in shipping what the price of the item is!”
So don’t forget: you are not your customer. The ideal customer who you market to LOVES your products, and they won’t worry about price increases or shipping costs.
Recognizing My Value and Charging My Worth
I’ve also struggled with acknowledging my value, mainly because I just wanted to be “helpful.” This is something I’ve worked hard to overcome in not only my retail store but with Savvy Shopkeeper, too.
Recently, I raised the price and minimum time commitment for The Shopkeepers Lab. It was a large price increase that was way overdue! But before raising the price, I was doing myself and my community a disservice.
Because the price was so low, the perceived value of The Shopkeepers Lab was low.
But the content in The Shopkeepers Lab is worth thousands of dollars and hours—especially if you’re in the first three years of business.
I also wasn’t helping anyone be accountable with a lower price. It was too easy to not show up, skim through the material, or just download the worksheets without absorbing all of the information inside.
And most of all, the lower price tag kept me playing small. I was afraid to share the actual value of The Shopkeepers Lab! And by not having a minimum time commitment, I allowed people to take advantage by joining for a month, bingeing the content, and leaving right away.
The members who show up, take in the content, do the work, and take their investment in The Shopkeepers Lab seriously see significant growth. I’m so grateful for them!
I’m sharing all of this with you to show you what low pricing can do. Although this is an example from an online service-based business, it happens in ALL businesses (including retail).
Stop undervaluing yourself, the experience you offer, and your expertise. Setting boundaries—and pricing IS a boundary!—is important.
My boundary is now telling retailers if you’re in The Shopkeepers Lab, you’re really in it. Because now, The Shopkeepers Lab is a YEARLY membership, not month-to-month. You take your business as seriously as I take mine.
My boundary is now telling retailers that there is serious value in The Shopkeepers Lab. It’s everything I WISH someone would have offered me when I started. It can shave years off your retail journey, all while giving you access to an incredible community of fellow shopkeepers.
My boundary is now telling retailers (and myself) that my time, effort, and expertise are worth something. I haven’t dedicated countless hours and 6 years to Savvy Shopkeeper for nothing. I can be helpful AND charge what it’s worth.
My boundary is now telling retailers that if you’re ready to boss up, show up, and do the work, The Shopkeepers Lab is for you! And if you do, you can work less, profit more, and GROW.
My boundary is now telling big brands that if they want to do “market research,” hire me or partner with me! Again, my time and expertise are worth something.
My boundary is now validating that what I preach, I practice. I am walking the walk and talking the talk.
I hope this post and episode empowers you to value yourself, your business, and your zone of genius. Because when you do, that’s when you start to really profit and pay yourself. Don’t forget that you’re worth it.
- Join The Shopkeepers Lab
- Get on the waitlist for Master Shopkeepers
- Apply for 1:1 coaching with Kathy
- [04:04] Signs You Might Want to Raise Your Prices
- [06:22] How to Raise Your Retail Prices
- [18:03] Recognizing My Value and Charging My Worth