Last time we looked at how to increase your closure rate by using a CRM, sales processes, and sales scripts. Now we turn to my favorite strategy for increasing revenue - price increases.

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Transcript of video:

My name is Nick Leighton and for the next few minutes, you are exactly where you want to be.

This is originally recorded March 23, 2021

Last time we looked at how to increase your closure rate by using a CRM, sales processes, and sales scripts.

Now we turn to my favorite strategy for increasing revenue…

I LOVE this. This totally gets me excited.

How would a price increase change the amount of revenue in your business, how you spend your time, and the take-home pay you afford yourself?

I run this exercise with pretty much every client I coach and the results are AMAZING.

Let’s get theoretical for a moment.

Let’s say you currently have 1,000 customers who each spend $1,000 per year - it would mean you would have a total of one million dollars in revenue.

Let’s say your cost of goods, not including marketing, is 50 percent, or five hundred thousand dollars, and your overhead is 40 percent, or four hundred thousand.

That’s one million revenue

Less $500 thousand cost of goods sold

Less $400 thousand for your overhead,

So your profit would be $100 thousand dollars.

If you sell more, let us look at the number behind that.

To double your income, you would need to double your customers. You might get some economies of scale on your overhead, but that usually goes up with your customer count.

In other words, you need to sell to - not 1,000 customers - but to 2,000 customers.

2,000 customers at $1,000 spend a year. That’s 2 million in sales.

Your cost of goods is 50% - or 1 million dollars

Your overheads are probably still 40% - or $800,000

And your profit - with twice as many sales, is twice as large. Instead of $100,000 profit, you make two hundred thousand profit.

That’s going to be hard work.

Twice as much work, but twice as much profit.

Now let’s check out what happens to your profit when you raise your prices 20 percent.

Income per customer goes to $1,200 - because your prices went up 20%.

X 1,000 customers = $1,200,000.

Cost of goods sold holds firm at $500K and your overhead is still $400K.

$1,200,000 - $500,000 - $400,000 = $300,000

A 300% increase in your annual profit with only a 20 percent bump in price!

But I hear you… with a price increase – maybe not all your customers are coming along for the ride.

Even if you lose 10 percent of your customers over the price rise, the math still works. I’ll save you the math explanation. But with a 20% rise in prices and 10% customer loss, your profit is now $230,000.

You’ve more than doubled your profit with 10 percent fewer customers and 10 percent less work.

Now, I know it can be scary to raise prices; I have been there, but it is truly the easiest way to grow profit.

That doesn’t even take into account the added bonuses of being able to spend more to acquire new customers, being able to serve your customers better, and give a better guarantee! More profit opens all sorts of doors for your business.

And I have to be honest... of all the business owners I have worked with, over 95% can raise their prices.

Now it’s your turn...

What would happen If you raised your prices 10% or 20%?

How would that change your profit?

How does that feel?

The next question is - how are you going to do that?

I get that you may not want to raise the price on all customers.

I get you may want to treat current and new customers differently, or current customers based on how long they have been customers.

I also understand you may have different products/services that you may want to treat differently.

Do you need to wait until a certain time to change prices?

Do you need to give customers a certain amount of advanced notice?

How are you going to inform them?

These are all great questions… and they are easily worked through.

So do it. Have a plan and raise your prices.

Summary:

Raising your prices, even with a small loss in customers makes a big difference in profit.
Work your numbers to see what makes sense for you and your business.
And I feel you if you think this is scary… it can be. But I will share with you that this has worked 100% of the times I’ve run with coaching clients. So have a plan and implement it.

Next time, I want to highlight seven other amazing strategies that you can use to increase your revenue. Join me next time.

And if you like the tips and tricks here:

check out our new more revenue worksheet - I’ll link to it below
please do me a small favor - like and share.

My name is Nick Leighton and I wish you passion, profit, and happiness.

Would you like to increase your revenue this year? This is for you: https://www.exactlywhereiwanttobe.com/MoreRevenue

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