6 signs it’s time to raise your prices.

Thumbtack Writer hannahL
Thumbtack Writer
17 30 7,059

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Knowing exactly how much to charge for your services is as much an art as a science. Staying competitive is impossible if you don’t raise your prices, but knowing when to do so is tricky. We caught up with professionals in all different industries to understand when they decided to raise their prices and why. Based on their feedback, here are six signs that it’s time to think about charging more.  

1. Your competitors charge more than you.

Having the lowest prices in town can help when you’re trying to get a business off of the ground. But once you’ve established yourself, it’s time to raise your rates. Find out what other people in your industry are charging, and make sure you’re in range, but still competitive. Remember that having the lowest prices isn’t always the best business move, and tends to attract people who are making a decision based solely on price.

2. You’re so busy, you’re turning down work.

If your workload is at capacity, you’re doing something right. You probably have a great reputation and lots of referrals — good on you. But if you find yourself in the position of having to tell clients you don’t have the bandwidth to take on any more work, it’s time to raise your prices. Clearly your work is valued, and your rates should take supply and demand into consideration. You might even use that extra income on things like payroll or marketing that may not be the best use of your time and frees you up to accept more business.

3. The cost of doing business has increased.

If your operating costs have gone up because of things like inflation, rising labor costs or steeper prices on equipment and repairs but your profits have not, it might be time to raise your prices. Make sure you have a comprehensive bookkeeping system that includes your revenues, costs, and profit so you know exactly how much you’re making and spending. Then track those costs over time to see how much you’ll need to raise your prices to keep making money.

4. You haven’t raised your rates in quite a while (or ever).

When you first started your business, there’s a good chance you didn’t initially charge what you were worth as a way to attract customers and get your foot in the door. But if a significant amount of time has passed and you still haven’t increased your rates, it’s time to give yourself a raise.

5. You’ve gotten better and learned new things.

It’s common to price low when you’re getting started, in large part because you’re still developing your skill set. As you invest more in training and developing new competencies, you deserve to make more money. If you’ve gained new skills or improved on old ones, it should be easy to justify an increase in prices.

6. Your customers are high maintenance.

It’s an odd psychology. But how much you charge says a lot about how much you value your work. If a customer feels like they’re getting too much of a steal (or worry they’re doing something “on the cheap”) there is a good chance they’ll want to micromanage your work. If you charge more — and prove your worth it — how your customers treat you will follow suit.

How do you know your price is right? Tell us in Trending topics and share your comments below.

30 responses
Community Manager JasonB
Community Manager

This is an awesome article! Thanks, @hannahL!

Treeclimber76
Level 4

Thank you and i never thought about raising my prices but this right here is exactlly right

cmcleason
Level 5

I'll have to think about this! My prices are definitely low in my area, which I thought was a selling point to attract business, but it might be time to raise my prices. 

HamelmanWelding
Level 4

This is a great article and is good encouragement. I want my customers to value what I do for them as well as them valuing me and my service. I can see that giving a great price alone may not accomplish that. 

AnUnusualAffair
Level 1

I have pretty much stopped bidding through Thumbtack because the users do not seem genuine.  Everyone wants something for nothing or well below market.  Perhaps instead of making money on the backs of vendors, Thumbtack could do some vetting of the clients.  I understand that it takes money to make money, but I'm not running a charity or looking to break even.  Thumbtack clientele is about on par with Craigslist.

TGrubbs
Level 1

I agree with AnUnusualAffair with the assement that most Thumbtack customers want work done way below market.  I do not even reply or post to clients asking for work that would normally be billed out at higher cost and they select less than $250.  example one that came into my queue yesterday for food photography that wanted 50 images / dishes for less than$250.  50 images of finished and process food is a 2 to 3 full days of work + licsending for the images.   Not worth the time trying to convensce some one that this is really going to cost more than $250 to get what they are asking for.   

CMHSOhio
Level 4

Number 2 is right on, It’s time to raise to the next level and maybe hire more help.

MarcH
Level 5

Initially, with the buy credits/bid system, my service area was substantially larger than it is now. Thumbtacks new way of doing business has forced me to reduce fuel and time costs. I also ignore one time only gigs. They cost the same as a repeat customer but the ROI is nonexistent.  Generally they're homeowners/renters who've run afoul of an HOA.

Mike2
Level 5

I feel the same way An unususal affair feels. Way to many people on Thumb tack are just playing games. They don't return phone calls aren't home for appointments....... Would pay more for a real  person who is actually looking to buy windows.

tiffanykatz
Level 4

I appreciate this article and I agree with most of the tips listed.  I also wanted to add that I have turned off my instant match for weddings because it wasn't working for me.  I was getting a higher response rate sending quotes on my own even though I really don't have much time to do that Smiley Sad

Glenn2ns
Level 3

After auditing my 6 months old TT connection, I realize I've spent about $1k - mostly since June when they switched pricing. Also, the leads I have protested for being charged are almost all since June. 

I almost don't buy TT leads anymore. Used to love TT but have had to resort to alternatives. Real potential customers who pay realistically for my services. I think TT can fix this. Their customers are fleeing.

Bosselini
Level 5

I'm a personal trainer and own my own fitness studio. I have raised my rates two times in the past 6 months. When I started, I had a few clients tell me my rates were too low. I have been in sales for a long time and one thing I have learned is to NEVER be ashamed of my price. But, the article is correct in that your price makes a value statement about you. I'm very good at what I do and I price accordingly and, subsequently, my prices have increased as my business has grown. The bottom line is, not every customer is MY customer. I market for clients who will be for me longer than one month and not necessarily to those who just want to lose weight soley for a particular upcoming event like a vacation. As a trainer, customer retention is the foundation of my business.  To address some business owners on this thread, I agree with you 100% that some of the prospects on Thumbtack are looking to get something for nothing. In my case, I respond only to the select demographic of who MY typical client is (female, 27-50 years old, in a 15 mile radius from my studio, etc.) as to not waste money on tire kickers or bargain shoppers. As a new business owner I don't have the luxury of wasting money on unproductive marketing efforts.

annlesmerises
Level 4

i agree with most everyone on this subject. I cannot give a quote if I can't contact the customer. I specialize in detailing homes meaning I go  in for  one time and occasional cleanings. I do get a lot of repeat customers. I am bonded and insured and carry Workman's Comp. I do a tremendous amount of business, but not through Thumbtack because people most often do not respond to quotes. They don't answer the phone and when they do, they say they are just checking prices. It is too expensive to pay for useless leads. I am currently paying $26.00/month for something I don't use. I was supposed to get unlimited leads for this price. It's not happening. I will not be renewing my subscription. My work is intense and tedious. I take great pride in what I do and expect my cleaners to always do their best. Most customers do not understand what a deep cleaning is. I will be looking for customers who understand that this service is for people who are serious about what they want done. These customers want to pay $20/hour, if that. I travel all over New Hampshire. I do not do weekly or bi-weekly cleanings. I look forward to more comments from others.  Ann Lesmerises, Quick Snap Cleaning, LLC.

 

DefiningImagery
Level 9

??? I'm baffled by this article! I have to charge half my normal rate in order to come in anwhere near the budget selected by TT customers! TT shows insanely low rates for photography services! These rates that you put out as "guidelines" for what the customer should expect the job to cost, have NOTHING to do with real world rates that professional photographers charge! Apparently you got your "data" from amateur shoot-n-burn wanna-bes, because the rates that TT give are what hobbyists charge, who are looking to make some undeclared cash on the side. My overhead costs to put a person in front of my camera are about $200 per session, yet every day requests come in with budgets of $100-150. Those jobs actually cost me money out of pocket to fulfill. If the client doesn't purchase extra prints, wall pieces, or an album, that job is actually a loser for me. PLEASE contact me for proper budget estimates to provide for clients, because they are getting burned every day because they hire someone based on your saying that's what it should cost, and then they get some amateur to take awful, unsusable images.

Nick
Level 4

I think it is BS what thunbtack is doing changing everything. Without us contractors they would be nothing. It was 5 contractors in beginning competing now its 15. They are getting greedy and they need to get clents phone numbers is a must so us contractors can market these people once we pay for the leads. I havent got one job since the switch there program. Ive been a top pro for years and this is the thanks I get. Word of mouth does travel and thumbtack is just looking out for them not us contractors. 

CMHSOhio
Level 4

I started out 2 years ago with TT and even then there was always the people that want your service for next to nothing. 

I have been and still am on other sites and they all do the same, they give the customer an average cost for services. None of these prices are even close to the cost of running a legitimate business with Insurance, workers comp and payroll.

I lost my top pro status because I have not used TT for several months so no reviews and hires. 

It is good for a start up, but after awhile it became more frustrating compeating against the uninsured that it seems allot of people are willing to take a chance with, that is until something goes wrong and we all look bad,

With so many leads going out from TT they really should verify the legitimacy of the providers using TT, if for no other reason to protect the end user, our customers.

JF
Level 4

Thanks somewhat for this article. In fact i had already decided to raise my rates but this reinforced that decision for me.

WRT TT overall, I have become increasingly disenchanted with their service. I think it was great for both TT and me when I first started my business. But I’m not looking for unlimited growth. I want to get AND KEEP good customers and the “TopPro” parameters don’t support this business model. Since changing their bidding structure I've used the site less and less - very unhappy with the change. The “instant quote” idea is a joke for my business since i am wholly commited to personalized service, not a one size fits all approach. I look forward to the day when I no longer need to use TT for leads!

Wanugee
Level 2

I agree with this article. I have raised my prices slowly as business grows. I have a good steady base of repeat clients now. For new clients, I always try to manage expectations with my quote or pre-work communications. I don't bargain, either, the prices are the prices. If prospects want something different or cheaper, that is fine with me, they can go elsewhere. If you don't value your own work and worth, your prospects and clients won't either. It is a lot easier (and cheaper) to retain good clients than to create new ones.  

djsteve4912
Level 4

I raise my rates when I need to. Please don't quote for me. It's far less than it should be.

Moderator Meckell
Moderator

@Bosselini @Wanugee you bring up some great points. Thanks for sharing your thoughts and suggestions with the rest of us! 

Moderator Meckell
Moderator

@DefiningImagery I really want to hear your thoughts on what you think the cost is that customers should expect in your area. Will you send me a private message with any info about this that you think will be helpful for us? I'm not promising this will get implemented right away, but I want to send it to our product team as it will be super helpful to us as we make changes in the future. I look forward to hearing from you. 

Moderator Meckell
Moderator

@Nick, you're right, we would be nothing without you pros and we do genuinely care about your success. Requiring phone numbers from customers is something we tried in the past. What we saw happen was a huge decrease in requests that were coming in because customers didn't feel safe leaving that info. When we make changes and updates, we make them in efforts to better our platform to get you connected with new customers. 

We are looking out for you and I want your business to find success with Thumbtack. If there's anything I can help you with, please reach out to me. I'm more than happy to look over your account or even take your feedback as I know sometimes it feels better just letting your thoughts out. Either way, I'm here to help! 

SteelPort
Level 5

This article is very insightful for the upcoming future as a business owner and service provider.  However, I have to agree with a lot of the other owners and vendors.  A lot of the perspective clients I come across feel like a person just "window shopping" or no where near serious enough to embark on the service they are seeking.

While we can expect everyone does their own due diligence, these "clients" end up costing us leads that go nowhere.  Numerous times, I have been charged because a "client" cancelled a project.  Is this a scam?  No way for us vendors & pro's to know for sure.  But thumbtack needs to do better, we appreciate the platform and what it offers, however their needs to be a better screening model for those seeking us and our industries.

DefiningImagery
Level 9

Meckell,

Why would a client not feel safe leaving a phone number for a pro, who they are supposedly looking to hire? That is not the reason you saw the decrease in requests! What you were doing was called "pre-qualifying". As a business, you should be aware of this simple concept. By asking a client for thier phone number, you INTENTIONALLY weed out the serious clients from the lookers and the just curious.

If Thumbtack's intention was to provide us the highest quality source of leads, all of your pros would be very happy campers. What everyone is screaming about is that they think the "leads" are bogus. That's because you haven't made any type of barrier to entry that would weed out the people that are tire kickers. We pros find it hard to believe that TT wouldn't understand such a basic concept of business. Therefore, it leads us all to believe that they do know this, but TT chooses only cares about pumping through as many names as possible, qualified or not, to make the most revenue off of each name. That's also why we now have 15 bidders instead of 5. It's much higher revenue for TT.

So, you said you didn't request phone numbers because the customers didn't feel safe, yet you have all these pros who feel unsafe because we don't know when a request is a serious client or a bogus browser. I don't feel safe when I respond to requests for boudoir photography and now just gave all MY contact info to a "potential client: who turns out to be perve who then harasses me for months! I've been with TT 4.5 years and I only just put my own photo in my account, because I didn't want to be harassed by perverts who could see that I'm a woman. Where's my margin of safety? Who is protecting me as a pro?

We pros need to feel that our bank accounts are safe! You have access to charge us whatever undisclosed willy-nilly fees you want. Do we not at least deserve to have a direct contact phone number in return? How many times have we paid you, only to have the client close their account, or cancel their request, and now we no longer have access to the lead we paid for! Then we call in for a refund and TT says, "You paid for the introduction." What good is an introduction if all you get to do is say hello and then get locked out of being able to contact them?

The basis for all this uprise and anger is that WE PROS do not feel safe! But, again, as appears with every answer, it's all about the customer experience and TT disregards the fact that WE are the paying customers and nothing is done on our behalf. It's truly a shame that Marco is not realizing who his actual customers are. If he were to ever look at the system from our point of view, he would see the fear. It's time to share the love and work as a team.

Designfrix
Level 5

@DefiningImageryThank you for your comment and candor. Exactly my point of view as well. You totally nailed it.

I have contacted TT so many times for bogus leads that I had to pay for. I have since turned off instant match and rather be selective.

As for feeling safe - no, not at all! As for barely breaking even - yes, barely.

Its more of a hobby now than a business. A nice way to occupy my time and not get bored.

I'm actually looking for a regular 9-5 job with a paycheck now. Its less frustrating (even if it is something I don't love to do).

Designfrix
Level 5

@DefiningImagery

I just looked at your profile. Beautiful work!

Being a photographer myself (SVA) I can spot good work.

TT should be very happy to have you!

DefiningImagery
Level 9

Awww, that's sweet. Thank you very much. Smiley Happy

TT should be very happy to have every pro, however, as their clients, none of of seem to feel any sense of appreciation. In fact, they don't even acknowledge us as their clients - they think the users are their clients. WE are the ones paying them, that makes us their clients. I don't hold my breath awaiting appreciation from them! LOL! So, it's nice to hear that from a fellow pro. Smiley Happy

Thank you!

Jo Anne

bonnie_bill
Level 8

When Thumbtack has been in business as long as we have I will consider this advice that right now I find ridiculous. I do not change my business model 6 times in 4 years. I have the same model now that I had 20+ years ago and that is consistent excellent quality (always 5 star) at fair and competitive prices. I process 40-50 photo shoots per year and none are now with Thumbtack. I used Thumbtack successfully and easily became a Top Pro. I have not had an order converted from a quote with Thumbtack in two years. However our business volume has over doubled. I would suggest Thumbtack take some advice from those businesses that have been successful with or without them. Get it back together Thumbtack! Advising people to try to inch out every penny possible may not be such a good long term strategy except for Thumbtack. And maybe not for them either over the long term.

Cristydiroma
Level 4

Good to know. Thanks for building our confidence, and how much we should value our work. 

SeanArcher
Level 3

Great points.  Definitely something to keep in mind.