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The Magic Cafe Forum Index » » Tricky business » » How (not when) to raise rates (0 Likes) Printer Friendly Version

iwillfoolu
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So when you do decide its time to raise a rate, how do you go about it? I'm not talking so much about new clients, but more with repeat customers. I'm also not talking about should you raise your rates. Once you've decided to do so, how do you tell previous customers the news?

Joey D
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New York Magicians
Magician New York
Greensboro
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I tell them when they call to book a show. Most people understand that rates are likely to go up over time. A client's discomfort with a rate increase will probably correspond to the amount of the increase. A 10% increase is unlikely to turn off people who have hired and liked you before. A 50% jump might scare a lot of them off. I do kid shows and a lot of my repeat customers have no idea what they paid previously.
Scott Burton
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Tell them that you are more in demand that you had to raise your rates. Everyone I've dealt with understands this. Not everyone may be able to afford the next level of rate but they'll understand the situation.

Perhaps have another person to suggest to charges a lower rate in case they can't afford you.

Of course, you honour existing contracts at the agreed upon rates.
jay leslie
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I have raised the rate for new customers but only raise the rate for existing customers by half.
Example: Ye Olde rate was 800 and the new rate is 1000 but because you value the existing customers loyalty, their rate is reduced to only 900.

This is the exact same pricing structure & procedure that most advertising media use, some insurance companies and occasionally..... a con-man or two Smile
Mindpro
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Many factors can come into play as to when you should raise your rates. This is or can be based on how much you are working, how much you want to be working, pricing the area in which you work and how you desire your business to be positioned in your marketplace. Typical thinking is when your schedule starts filling up easily, you should raise your rates. Another example is if and when your median market rate rises. Some people at some point in their performing career or business may eventually come to a point where they decide they want to work smarter not harder, this is another time when raising your price is often considered.

It also depends on your value to your customers and if they understand that value what they will pay. One of the best pieces of advice I often give is if you are for whatever reason thinking of raising your prices and you are already busy, it is time to consider raising your pricing. Also another good time to raise your prices is if you create a new show, add new elements or an assistant, etc.

Is your performance worth more money? Not just to you but to your customers?

As far as worrying about your current or previous customers that should not be a major concern. These are the group that it should actually be able to justify a price increase if they were truly pleased and see the value in your performance. Also don't feel the need to explain, justify or even attract attention to your price increase. If asked be sure you explain to them that due to demand and being a popular professional, having limited avails, etc. you have simply had to raise your prices slightly. As long as it's not a drastic jump most previous clients will be more than understanding. Don't feel the need to "grandfather" them in at your lower price, it is not necessary.
Dannydoyle
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Never get in the habit of justifying your price. If you under promise and over deliver you will be fine.

Find what you are worth and charge that.
Danny Doyle
<BR>Semper Occultus
<BR>In a time of universal deceit, telling the truth is a revolutionary act....George Orwell
Paddy
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My price goes up on Jan 1 every year. Now for customers that have booked me for a number of years, when they book this years show I tell them "I raised my rate by $XX. If they hesitate I give them last years rate.
Non Impediti Ratione Cogitationis

I reject your reality & substitute my own

http://www.Scho-Lan.com
Benji Bruce
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I just made an audio for the http://steadyflowgigs.com site going into detail about how to increase rates and how I went from charging a couple hundred to being able to book gigs like the $12,500 Finland gig in a couple weeks.

PM me your email and I'll send you the audio

The two common pieces of advice for increasing rates are:
1. Increase when the "demand exceeds supply"
2. Look at what others are charging and charge something similar...maybe higher

Both of these are wrong.

The reason the first one is wrong is because you enter a different market when you increase your price. People who pay $500 for a show are COMPLETELY different than people who pay $5,000 for a show. So you can do 300 shows a year at the $500 range but that doesn't mean you will be able to book a single $5,000 show. When you increase your price, you change who you have to market to.

The second one is wrong because you never know what someone is doing behind the scenes....your situation is different from theirs. If you look at someone who charges $5,000 for a show, you don't know who he is contacting, what connections he has, whether he hires someone to do the marketing for him, etc. So you can't model someone when you don't know what to model.

I knew a long time ago that I didn't want to follow the normal advice because it would take FOREVER to charge a lot for a show...and I'm glad I didn't listen. Send me a PM and I'll send you the link to the audio.
Mindpro
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Let's connect Benji and Mormo and listen to the great advice that flows. Nice of you to pop in and make a shameless plug Benji, you've been missed.
scottds80
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I had learned a lot from Benji's YouTube videos on business tips.
"Great Scott the Magician", Gippsland
Dannydoyle
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Well as long as we are Benji Bashing, let me say his advice on another thread on video editing and even content were dead on. I won't comment on this thread or what not but seriously he did nail the video thing. It is the truth.
Danny Doyle
<BR>Semper Occultus
<BR>In a time of universal deceit, telling the truth is a revolutionary act....George Orwell
Al Kazam the Magic Man
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Quote:
On 2013-05-06 20:02, Scott Burton wrote:
Tell them that you are more in demand that you had to raise your rates. Everyone I've dealt with understands this.

Of course, you honour existing contracts at the agreed upon rates.


For the life of me, I don't seem to get this logic. I see it all the time here. "We've been so busy, we've had to raise the price"! WTF, it comes off as saying, "We've been so busy making lot's of money, we feel we can raise the price and make even more money, suckers". It has an arrogant feel to me, that just doesn't seem right.

I raise my prices from time to time, mainly to reflect the increasing price of doing business, not so much because I've been "so in demand". Just my style.
Al Kazam --> Magic guy in Perth Australia
Mindpro
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No not at all, it's simply supply and demand. Pretty basic business really. Availabilities are at a premium, that as I professional I should get paid for.
Scott Burton
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Business 101. Pricing (of everything pretty much) is influenced by market demand relative to supply.
scottds80
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I've been a professional self employed house painter for years, and when my prices are low, I get so much work it's booked months in advance.
When it's flat out like that, I raise the rates within reason, or say I can't do it.
When it's quiet, I quote lower just to keep the work flowing.
It's supply and demand and that's how it is just done.
"Great Scott the Magician", Gippsland
Al Kazam the Magic Man
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I don't lower my prices when things are slow. Once I set the price it doesn't make for good business to be lowering it when things are slow. I have a lot of repeat customers and to be telling them different prices according to the demand of the season doesn't seem right to me.
Looks like I'm on my own here.
Al Kazam --> Magic guy in Perth Australia
scottds80
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If its the difference between taking days off from lack of work, and keeping a roof over your familys heads, it's probably wise to negotiate a bit on price.
My wise old boss tells me "sometimes you just have to take what you can get" when times are slow. Depends on how much cash flow you have at that time I guess.
"Great Scott the Magician", Gippsland
Scott Burton
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It's a business decision so I respect your decision Al as one that you are most comfortable with. I am not a fluid as Scott (the other one) with his pricing in his painting business but my rates go up year over year as the phone calls and demand increases. I just came off some really crazy months so I made some big increases (double the previous rate) and people are still booking me. Part of this is a desire to maintain family and personal balance with work. If people see value in you (as demonstrated via demand), then you have the right to charge the value that they place in you. But you know your business and your clients best so I respect your decision.
Dannydoyle
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I have never justified a price to s client.

I also Do not lower them.
Danny Doyle
<BR>Semper Occultus
<BR>In a time of universal deceit, telling the truth is a revolutionary act....George Orwell
Al Kazam the Magic Man
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Great comments guys. I appreciate it.

I was mainly looking at it from a customers point of view, and how I react to the old, "We've been so busy, we had to raise the price" blurb from businesses.

Don't get me wrong, I have a mortgage as well, and "need" to put a roof over my family's heads.

When I first got started I didn't have the highest price in the area I work in. Now with the years of experience and having a show I feel is comparable with the better performers in my city, it's much easier to command higher fees. When I feel I need to raise the price to keep up with all the other increasing costs of doing business, I just practise saying it to myself a few times and then it's easier to speak with some conviction with punters over the phone or face to face.

Works for me.
Al Kazam --> Magic guy in Perth Australia
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