How Do I Increase Prices When My Business Partner Doesn’t Want To?
Recently I was asking this very interesting question. It doesn’t have to be a business partner, it can be a partner at home, a business friend, colleague, someone else in a complimentary industry, someone offering the same product/service or it can even the small business owner up the road.
We are influenced more than we realise by the people around us.
Everyone likes to have an opinion on how much ‘things’ should cost. So first, we block out other people’s opinions and focus only on those who are invested in the business.
When your business partner is ‘afraid’ or not sure of increasing prices, one reason may be it’s because they can’t yet see that the benefits of increasing the price will outweigh the costs. And the costs may not be physical costs such as reduce sales, but emotional costs such as putting them outside their financial comfort zone. Or it may bring up beliefs they have around money.
We all have a ‘financial capacity’, similar to having a particular size container of cash or bank balance we are comfortable dealing with. Have you ever had to carry a few hundred or thousands of dollars in your handbag to pay a deposit or bond and felt uncomfortable till you offloaded the cash and only had $50 in your wallet? It’s similar to this but not so visceral because money has now become intangible.
We can comfortably deal with a particular level of cash, go over that, and we feel uncomfortable until we work out our own way to manage that amount of money. If we don’t work out how to deal with the increased level of money we’re required to manage, we spend that excess to bring us back down to our comfort level. You may notice this when someone wins the lottery, they usually end up back at the ‘financial ceiling’ within two years.
Try discussing these ideas with your business partner, ask them if they can see the benefits of increasing the prices, what costs or ‘negatives’ do they think will come with increasing prices and start sussing out both of your comfort levels around cash. If there’s a mismatch, you both may need to do some work around increasing your ‘financial capacity’.
Do you have a friend that may have reach their ‘financial ceiling’? Forward them this article to have read, because they funny thing about having a financial capacity is, once we recognise it, we can begin to lift it. From survival mode, to doing better, to doing really well. We can all keep increasing the level of cash we feel comfortable making and managing.
WOULD YOU LIKE TO STAY IN TOUCH?
Please join the Financial Insights community.
I know business owners don't have a lot of time for scrolling. So I share my in-depth research + experience, new business finance practices, upcoming availability of 1:1 work, group catch-ups and monthly client openings first with this community via email.