How to Significantly Increase Your Prices,Without Losing (All of Your) Customers

I have the answer to all your business problems and prayers. There is one really easy think you can do to go from struggling to making consistent and significant profits. It’s so simple anyone can do it, even you. But you probably won’t do it. You’ll know you should, but you’ll still have doubts. I’ll reveal this in a moment.

I’ve helped hundreds of thousands of start up and scale up business owners in the last 11 years, and most of these people initially think you can’t just increase your prices overnight. Why?

• They think they will lose most of their customers
• They think their customers will complain
• They don’t think it is fair to their customer loyalty
• Other fear they don’t yet know is real

They only think of the cost of increasing their prices, and not the cost of NOT increasing their prices. After all, Apple and Rolex seem to have no problem with it.

So consider these 8 points and then test the following 7 points to significantly increase your prices (or face the costly consequences)

1. 10-20% swing won’t impress you much

If you had assets or investments, and they went down 10-20%, you probably wouldn’t go into a fit of panic or rage. Sure, you wouldn’t be happy, but you could probably handle it and control your emotions well enough not to make fashion selling decisions. If they went down 50% that could be a different story. And in reverse, if they went up 10-20% you probably wouldn’t be overly manic, excitable and plan your retirements. So a 10-20% value (or price) swing wouldn’t likely bother you too much. And so it likely is with your clients and customers if you increase your prices. Would a tenant move out for a 10% rent rise? Probably not because inconvenience and removals could cost years of that extra rent.

2. Most of price rise is profit (overheads covered on current pricing)

Most people don’t realise that if you have a 10% profit margin (let’s say you make £10 on every £100), if you increase your prices by just 10% (assuming no extra overhead) you double your profits with such a small price increase. All your overhead, staff, loan, premises, stock and more costs are currently covered (or not quite) by your current pricing, so all (most) of the price increase is profit.

3. Inflation

Every 15 years or so inflation halves the relative value of money. This means your prices need to have risen around 100% in that time, to not have risen at all in relative terms. So every 15 years you need to 2x your price to 1x your price. If you don’t meet this rise, your suppliers will and the costs or goods and services to you will rise, but your prices won’t and your profit will get eaten two ways, lower pricing and increased cost, which is the direct opposite of what you want to do.

4. Would you really lose all your customers?

If you increased your prices, would every single one of your customers really flock to your competitors? Really? Sure, you might you lose the demanding ones; the ones who want £10 for £5, but that could be a good thing (next point). Not all customers cost you the same overhead, because some customers are a huge drain on your time, resources, staff, customer service, refunds and cost you a LOT more than others (even in commodity based business). one customer could cost you 5 or 10x what another does, and as such the least demanding one has a huge profit margin and the most demanding one has a negative profit margin. So you know what you’ve got to do.

5. You won’t be able to grow or sustain your enterprise

If your margin isn’t good, because prices are too low (or costs too high), then you can’t sustain your business, and it will go bust, and the very customers you wanted to give a bargain or great service to end up losing out. Or future customers lose out. There HAS to be fair exchange, balancing the selfish and the selves, the profit and the service, the price and the value. That means depending on your business niche and scale between 5% and 50% net profit margin sustainably, even and especially through leaner times.

6. If prices are higher, service & value are better

Or at least they should be. if you have fair profit margin you can give a better service, reinvest to innovate and improve your product, and overdeliver. Price is what you pay, but value is what you get. You get less complaints and more gratitude the more value you can offer, and you can’t do that without any margin. Rolex put their prices up regularly, sometimes as much as 10% in a year. The Daytona has almost doubled in price in the last 8 years yet the waiting list to get a new one is 9 years or more.

7. You will resent customers if your prices are too low

When I was an artist, struggling to sell my work and make any money, I had guilt around pricing my work. I’d sell my art for less than it, and I, was worth, then I’d be bitter towards my customers. But they aren’t going to offer you 50% more than you price your products. If you increase your prices you can always discount them. The low prices that cause resentment become a self fulfilling prophecy in that you don’t want to give service and gratitude, because you aren’t making any money. And none of it was their, or the markets fault.

So here are 6 ways to increase your prices and increase your profits without losing all your customers:

1. What about a higher end product?

Most people wouldn’t buy a £50k Toyota, so they created Lexus. Nissan created the GTR ‘brand’. Apple have the iPhone X. Giorgio Armani created Armani exchange at the lower end, and Collezioni at the higher end. If you are concerned about increasing your prices, create new models or even brands, to protect existing products and smash through price ceilings.

2. You doubt it, but you haven’t tested it. So test it

Unless you try, how will you ever know? Why not test a higher price point to a small segment of customers? You could sell newer or more expensive versions to proven, high paying customers, or even new ones. The market will tell you the optimum price, and sometimes that price is actually higher than you think. Low price means low value in the minds of many of your customers. You should always be testing new products and price points anyway, to innovate and grow through market and competitive forces. Do. Not. Wait. Or guess. Test.

3. Commodity or rarity?

Some people feel their product is commoditised, the price is set, and they couldn’t increase it as no one would buy their products. They could be in a very mature or competitive market. But even in those cases, you can usually find a way to increase profit margin. Airlines are price competitive, so different classes of travel and add ons were created. You could add bolt on services. Uber created Uber Exec and Lux. Or, you could simply move away from a commodity model into a rarity model, like Sunseeker, Ferrari or Audemars Piguet. You have a desirable product, finite supply and therefore virtually no price ceiling.

4. Invest in your brand & your equity (prices) rise

Market forces encourage reinvestment in quality and innovation to get the edge over your competitors and differentiate yourself in that marketplace. Do not get lazy or complacent, re-invest into improving and innovating existing and new products and services to increase the quality and value. As you do that will push the price up. But it only goes up if you push it up. ‘Brand equity’ is the goodwill value in your brand. how you do anything is how you do everything, so invest in brand value, reputation, customer care and service, as well as product improvements. Build your customer base and give value to your followers and fans, and they will be loyal in spending with you, even if you are more expensive.

5. Price escalation model

You could, if you are not that brave, increase your prices gently, around 5% a year. No one would likely bat an eyelid if it is that small and incremental. What’s stopping you? What’s the worst that would happen?

6. Increase VALUE first

Still here? Still not convinced to up your prices? Then try increasing value first, and you will see prices rise in alignment. You could offer extra care, add on services, better quality, or simply roll in all the above benefits in one go. But if you don’t then increase your prices you could have increased your costs and therefore reduced your margin.

7. Let your worst customers go

Not all customers have the same overhead costs. It is likely that 20% of your customers are causing 80% of your customer service, complaints and time drain. So let them go. Don’t offer them future products, let them expire gently. Once you do this your overhead will reduce and importantly, you will FREE UP time and space for higher quality, higher spending and less demanding customers.

As you raise your prices, incrementally of exponentially, your self worth rises in alignment. This in turn radiates gratitude from you to the customer, and back again. You then attract better people (staff, customers and partners) to your enterprise. That ‘goodwill’ goes back into the care or your product or service. And of course the reverse is also true.

What have you got to lose, other than your worst most demanding customers? TEST. Now. The answer to most of your business problems raised at the beginning of this article, and the easiest way to dramatically increase your profits is this: Put – Up – Your – Prices – Now.

Remember when a phone used to be free with contract? Now a new iPhone is over £1,000!

Source: http://unlimited-success.co.uk/blog/significantly-increase-priceswithout-losing-customers/

Managing Your Personal Finances as an Entrepreneur: 14 Tips From Leading Experts

As an entrepreneur, it's important to have your personal finances in order, because you never know what may happen with your business ventures.

There's no doubt about it that being a successful entrepreneur requires a lot of expertise in a lot of different areas. Arguably one of the most important aspects to becoming a successful business owner is having your finances in order; after all, with no money, you've got no business. So, to help aspiring entrepreneurs take their next step towards building their empire, we've asked 16 expert entrepreneurs for their best piece of advice for managing your personal finances. Here's what they had to say:

1. Diversify!

"Diversify. Diversify. Diversify. I know that's canned advice you would hear from almost every other "financial expert," but it rings especially true for entrepreneurs. Here's something you might not want to admit to yourself: your entrepreneurial venture has a greater chance of failing than succeeding (gasp!). By diversifying and placing funds into another side business, alternate investments, or just setting aside cash, you will give yourself breathing room in the event that you have to call it quits or need to pivot to another business. In my own experience, I have been able to diversify into other ventures that operate independently of each other and that has led to constant growth and more exciting opportunities."--Jeff Rose, GoodFinancialCents.com

2. Plan For Inevitable Rainy Days (Or Months)

"Since many entrepreneurs have to deal with irregular income, it's important to budget your personal finances around that to make sure that you have savings that you can draw from in the leaner months. You need to know that you can cover the essentials like housing, utilities, insurance, and food. So add up those critical expenses and put aside enough to cover at least a couple months."--Tom Drake, Canadian Finance Blog

3. Plan For Your Future

"Don't forget, you should still be saving for your retirement. Even on a fluctuating income you should aim for a small bit of savings each month. A good starting point would be to open up a Roth IRA and contribute the max each year. If you want to do more, consider a SEP IRA or Solo 401K account, which will help you shelter a lot of your business income from taxes."--Philip Taylor "PT", Founder, FinCon, PT Money: Personal Finance

4. Separate Business Funds From Personal Funds

"When you're an entrepreneur starting your own business, it can be a good idea to keep your personal finances and business finances separate. Not only will it give your business more credibility and a sense of legitimacy, but in some cases it may also help reduce your personal liability were something negative to happen down the road. It will also help you to be organized when it comes to paying your taxes, managing your bills and other payments."--Peter Anderson, Bible Money Matters

"It's simple but vital: Keep business and personal accounts separate and document profit distributions to yourself. As a one-person business, I didn't set up separate accounts soon enough. The CEO of a 10 or 100 employee business wouldn't use corporate accounts as his own; why would somebody running a company of one or five?

Not only do separate accounts make tax-time easier, they're essential if you want to sell your business or you face litigation or bankruptcy. In the worst case, intermingling personal and business accounts may negate the protections offered by your business structure."--David Weliver, Publisher, MoneyUnder30.com

5. Keep Your Expenses Below Your Income

"Never forget that expenses rise to meet income. This is the gist of Parkinson's law. This is the reason that a couple months after most people get a raise, it feels just as tight financially as it did before the raise.

Without an intentional effort, houses, desks, kitchen sinks naturally get messy and cluttered. We have to take action ON PURPOSE to keep things clean and organized. The same ON PURPOSE effort needs to be made to keep our expenses BELOW our income."--Bob Lotich, ChristianPF.com

"Since you probably have a budget for your small business, make sure one is in place for your personal finances as well. It can be easy to let managing your own money fall through the cracks while trying to grow and expand your endeavor. Use a website like Mint (it's free) and enter in accurate amounts for your monthly bills. You'll probably need to estimate your income unless it is consistent. Then, work on reducing all monthly bills. Your ultimate goal is to get your spending under your estimated income. Once you have a surplus, use it to pay down your credit card debts, start or improve your emergency fund, or set it aside for your retirement."--Andrew Schrage, moneycrashers.com

6. Automate Your Bill Payments

"When you're spending every waking minute on building a business or releasing a product it's easy to overlook personal bill payments. Automated payment services that let you setup specific rules for each bill and alerts for exceptions allow you to put your bills on auto-pilot and focus on your business. If you use a credit card you can help avoid leaking money via fees and interest by setting up spending limit, payment due, and late payment alerts."--Ben Edwards, Money Smart Life

7. You Get What You Pay For

"Hire the best people, not the cheapest. If someone is willing to work for free, say no. You want someone devoted to the project, not someone who regards it as a passing hobby that they can tackle in-between episodes of Dancing with the Stars."-- Paula Pant, Founder, AffordAnything.com

8. Protect Your Most Valuable Asset

"Many entrepreneurs overlook their need for disability insurance even though their ability to earn an income is their most valuable asset. Stop thinking "it won't happen to me" and know that it could. (The Council for Disability Awareness has some great stats here). Ask yourself how your family would live without your income or what you would do for income if something happened to you. What are your options? Are you protected? (Note: Life insurance is also very important if there are other's dependent on your income)."--Mary Beth, www.workablewealth.com

9. Maximize Retirement Savings Options

"Those that are self-employed have significantly more options when it comes to retirement savings. Beyond traditional 401k and IRA plans, the self-employed should consider SEP IRAs, individual 401k plans, and even defined benefit plans. These alternatives enable entrepreneurs to save significantly more for retirement in tax-sheltered accounts. For example, a SEP IRA enables a self-employed individual to sock away up to $52,000 this year for retirement. With a defined benefit plan, some are able to save more than $100,000 a year in a tax-deferred account.

Some of these options can become quite complex. As a result, it's best for entrepreneurs to contact a tax or retirement specialist to understand which alternative is best for them."--Robert Berger, doughroller.net

10. Take Your Business On A Money Date

"Check in with your business budget often by establishing a money date ritual. Each week I take myself and my business out to lunch where I review my accounts, create reports, and update my financial goals. It makes doing mundane financial tasks like paying quarterly taxes, or putting together monthly reports, a lot more fun and less of a drag. I actually look forward to getting out of the office (and indulging in a sweet treat afterwards), where I list out positive business accomplishments that have occurred over the past week or so. A money date is the perfect opportunity to reflect on what you've accomplished, where your business is now, and where you're headed."--Carrie Smith, carefulcents.com

11. Seek Out Professional Tax Advice

"Spend some time and money on getting professional tax advice from someone who works with small businesses and entrepreneurs. There are many tax savings to be had if you know what to look for. On the flip side, you can get yourself into trouble very quickly if you don't know what you're doing. Critical areas to look out for include reporting income and expenses, home office deductions, hiring employees vs. contractors, and more. It's money well spent (and will often pay for itself!)."--Ryan Guina, Cash Money Life

12. Strive To Smooth Out Cash Flow

"Consider your personal finances like you would a business. A business has access to credit in order to smooth cash flow for various operations. As an entrepreneur, your income might be variable, so having some sort of mechanism in place to smooth cash flow in your personal finances makes sense. I have a low-interest personal line of credit connected to my checking account. If a client pays late, or if there are other problems, all of my automatic payments are made smoothly. Usually, when the money does come, I can then pay off the line of credit immediately--without ever paying interest. Smoothing out cash flow in your personal finances is just as important as smoothing it out in your business."--Miranda Marquit, www.MirandaMarquit.com

13. Keep Your Business Expenses In Line

"Don't go overboard with your expenses! There's this myth that expensing something magically moves the expense to a tax-free wonderland but the truth is you are still paying for the expense. With income coming in and a company credit card it's easy to let your profits slip away with small expenses. Run your venture lean and only spend on what you need for the business."--Glen Craig, Free From Broke

14. Negotiate Everything

"When it comes to business, make sure you negotiate everything. Contact your credit card processors, your suppliers...contact everyone and renegotiate your terms on a regular basis. Everyday, our business is constantly bombarded with new vendors offering their services at competitive rates. Make sure you strike a conversation and pit your existing vendors against the new ones and you can save tens of thousands of dollars a year."--Steve Chou, mywifequitherjob.com

There you have it--personal finance tips from the pros that will help you build the businessof your dreams. Remember, as most of these experts explained, success is all about striking a balance with your finances. If you are cheap, you're not going to get quality results, but if you're too extravagant, you're likely to end up in the red and ultimately fail. Be smart, be frugal, and put money into things that will grow and you will be well on your way to success.

Source: https://www.inc.com/murray-newlands/managing-your-personal-finances-as-an-entrepreneur-14-tips-from-leading-experts.html

The 4 Money Principles That Will Make You Rich

Everyone wants to be rich, to have enough money to live and create their dream life without the need to work for someone else to make that money.

But most people believe that it is only the very lucky who will get there, or have to rely on a lottery big win to ensure that happens in life.

Here’s the truth – ABSOLUTELY ANYONE can be rich enough to have the life of their dreams with commitment and dedication.  

All you have to do is know and trust a few simple money principles and keep your eye on your financial goal.

Here are the four principles tried and tested that will get you to your goal.

Step 1: Start investing in your future today and DON’T STOP!

The single most important principle, and the younger you apply it the better, is to pay your future self a portion of every pound you earn right now.

A good place to start is aiming for 10% of your Gross Salary each month to go straight to your future self in Pensions or Investments.

Reason being if you use a portion of your money each month to generate income when you choose to retire from working, you are creating security and income when the days come that you don’t want to or can’t work.

To aim for the Goal of financial freedom and retiring earlier than normal retirement age of 65 – you want to aim for as high a percentage of your Gross Salary as you can comfortably live, and usually at least 25% and above.

Understanding the power of Compound Interest on your money and investments, where the natural laws of time allow your money to grow and multiple faster, is key to this wonder of saving a portion of your money each month.

Normal savings accounts currently offer between 0.1% – 1% interest rates if you are lucky, so do all you can to feel comfortable and research investing in Stocks and Shares to get the maximum return on your money you are investing.  

A good place to start might even be to look at ISA accounts (Cash or Investment) where the government will not charge you Tax on your interest increases up to a limit of £20k a year per person.

If you feel confident enough to – Put your money into the stock market, giving someone else your money for short term to make more money with on their efforts and create passive incomes from your savings too.

Never pass up the opportunity for FREE ADDITIONAL Pension contributions from your employer towards your future.  

Most companies offer additional pension contributions as a way to effectively pay you a higher wage, without the tax costs to themselves.  

If you company offers your matched contributions, make sure you sign up to the maximum percentage you can afford as for every wage you put in they are also adding even more money to it for your future.

Want to become Financial Free? There is even some simple maths to find out the exact amount of money you need to have saved to generate income for life.

Simply take the total amount of money you need each year to live and survive, or have the life of your dreams with, and multiple that by 25 to give you your exact Financial Freedom Goal Number.

Next is to work on a plan to save and achieve it.

Step 2: Spend your money like it was your last penny.

Rich people who stay rich for life spend their money smarter than most people.

They take time to find the best deal, time to consider if they really need that purchase and make sure that it is an investment worth their while and won’t lose money.

Too often we end up mindlessly spending money on luxuries we don’t really need, so perhaps give yourself a 24 hour cooling off period each time you “Click to basket”.

Check if you truly want that item, have found it at the best price possible, before you hit the order button.

Take time to be more mindful with your spending and you will find that the pennies all start to add up quickly to a small fortune.

Step 3: Keep your living costs as low as you can

Minimise all your expenses and keep looking to exchange your hard earned money for what you truly love only.

When you start a journey to financial security or freedom, we need to take time review our spending habits each month and make sure what we spend money on is worth it.  

Regularly look for ways to reduce your subscription spending – think car, home insurance, phone contract costs, credit card charges and ask the company for a better deal.  

You can save potential hundreds of pounds back into your pocket with a 10 minute phone call and a little effort with comparison websites.

Test your spending every few months by taking non-essential bills (such as that magazine subscription or gym membership) and go “cold turkey” for a week or monthly only.  By setting yourself a temporary goal of going without for only a short time, the sacrifice won’t seem so tough and you never know what you might find out about your spending patterns in the past.

Use the 10% Overpayment Rule to get rid of as many debts as you can, if you can without any overpayment penalties.

By paying 10% more on your monthly repayments for any debts, such as your home, car, credit cards and store cards you will very easily and without noticing pay one extra monthly amount towards that debt each year.

That overpayment could take years off your payments, returning more money to your pocket sooner than the bank or company would have liked.

Step 4: Start your own side business.

We live in a world where a single source of income, one job all your life, is no longer guaranteed.

We also live in a world where we have information and resources are literally at the touch of our fingers via the Internet, and absolutely anyone can put in the time to start their own side business.

Look to start a side income to add even more money to build your fortunes with, and also something you are passionate about if possible.

When you are able to control and generate profit from your own business, rather than work for an Employer, there will be no limit to the confidence it will bring in our life and to your earning potential.

By diversifying your household income as much as you can with a few income streams is not only a smart thing to do, but a great way to protect your financial security in the future too with your own talents and merits.

Think about turning a hobby into a small weekend business, or perhaps using a talent from your main job as a freelancer for some income in the evenings.

Over to you now…

Source: https://blog.themoneyshed.co.uk/the-4-money-principles-that-will-make-you-rich/

Three Contrasts Between the Entrepreneur and Employee Mindset

Written by Robert Kiyosaki | Tuesday, November 21, 2017

Read time: 4 min

Which mindset will you choose?

You often hear people say that rich people are greedy. To that I say, what kind of rich people do you mean?

Most of the entrepreneurs I know are some of the most generous people I know. Not only do they give a lot of their time and money away, but they’ve also built great businesses and products that enrich the lives of people around them.

On the other hand, there is another kind of “rich” person—the high-paid employee. While they may be charitable in their personal life, the high-paid employee can often be very greedy. They will always want more, even when the business is not doing well.

A great example of this is the recent news about Roger Goodell, the Commissioner of the NFL. Goodell is currently negotiating a contract extension with the NFL, and he is asking for a reported $49.5 million a year, lifetime use of a private jet, and lifetime health insurance for his family. He currently makes about $30 million.

The contract negotiation had one anonymous NFL owner saying, “…Several owners in this league who don’t make $40 million a year. That number for Roger just seems too much. It’s offensive. It’s unseemly.”

For those who may not be familiar, until recently, the NFL was a non-profit organization with tax-exempt status. And Roger Goodell is a life-long employee for the organization; having worked his way up from intern to what many people feel is the most-powerful man in sports.

NFL woes

Currently, the league is struggling. Ratings are down. As Michael McCarthy reports:

The league’s average TV audience through Week 5 of the 2017 season dropped 7 percent vs. the same period of the 2016 season, according to Nielsen data obtained by Sporting News. Worse for the league, the average game audiences are down 18 percent compared to the first five weeks of the 2015 season.

The NFL’s average TV audience (including Sunday afternoon, Sunday night, Monday night and Thursday night games) slid to 15.156 million viewers through Week 5 of the 2017 season. That’s down 7.42 percent from an average of 16.371 million viewers through the same period of the 2016 season, and 18 percent down from the average of 18.438 million viewers through the first five weeks of the 2015 season.

Additionally, the protests of the national anthem, a host of other scandals, and continued concerns about player head injuries are all dragging the league down.

Call me crazy, but now would not be the time to ask for a 20-million-dollar raise. Yet, that’s what Goodell is doing. That is greedy.

All of this is a good reason to contrast three mindsets of employee versus entrepreneurs.

Entrepreneurs take ownership; employees take from ownership

One of the things I love about successful entrepreneurs is that they put their businesses first. If the business is struggling or not making money, they don’t make money and they are responsible for fixing it. They have to take ownership.

Employees, on the other hand, don’t have to make the sacrifices that owners do in that regard. In fact, many of them, like Roger Goodell, want more money even when the business is struggling. If they don’t get their raise, they move on to another company.

Entrepreneurs create stability; employees demand stability

Starting a business can be a rocky endeavor, with a lot of risk and instability. Yet, successful entrepreneurs are able to take chaos and make it into a thriving business that provides stability for many working families.

Employees greatly fear instability and demand stability from their employers. One of the reasons employees want more and more from entrepreneurs, even when the business isn’t doing well, is because they think money provides stability. Unfortunately, it doesn’t, as many riches to rags stories can attest to.

The reality is that being an employee is highly risky. You have no control and you pay the highest in taxes. And if the business goes bad, you’re the first to be laid off—especially if you’re asking for more money at the time.

Entrepreneurs look at results; employees look at tenure

When things go wrong, a successful entrepreneur is the first to raise her hand and admit it was her fault. And when it comes to rewarding talent, it is based on results not effort or tenure.

Conversely, employees think that effort or tenure should be rewarded. This is why someone like Goodell, who has spent his entire life working for the NFL, can feel comfortable asking for so much money.

At the end of the day, tenure and effort are worthless unless you have results. Entrepreneurs understand this because if there are no results, they have to close the business. They can’t tell their investors they tried hard or lean on the fact they’ve been open for business for twenty years.

Which mindset do you want?

At the end of the day this is not a knock on employees. I have many people who work for me. They are wonderful people, but they think very differently than I do. That’s OK. It’s just not OK for me to think the way they do. I’m not wired that way.

Sometimes, people choose one path but change later. These become employees that operate like entrepreneurs in your organization. They are your most valuable employees—and usually the ones who leave pretty quickly, often to start their own thing—as happened to me recently. While it is no fun to lose a great employee, it is a lot of fun to see him become an entrepreneur. His mindset changed. In the process he brought more value to my organization, and later to his own life.

Each and every one of us must at some point decide what path we will follow—that of the entrepreneur or that of the employee. Which will you choose?

Source: http://www.richdad.com/Resources/Rich-Dad-Financial-Education-Blog/November-2017/Three-Contrasts-Between-the-Entrepreneur-and-Emplo.aspx