How to raise your prices

Are you feeling the pinch? Here’s how to let customers know about a rate hike — and live to tell the tale.

From electricity and petrol to loo roll and biscuits, the cost of running a business is on the rise. Interest rate hikes and skyrocketing material costs will make even the savviest sole trader or small business owner feel a little hot under the collar.

Once you’ve explored cutting back on expenses and drumming up new business, the one thing you can do to keep pace with rising outgoings is to raise your rates. But that’s not often as easy as it sounds.

Fear that a price increase could result in lost business is the main barrier, but should this stop you in your tracks?

Here are some things to consider so you can massage your price list and come out on top.

How to raise your prices: Know your worth

First up, a confidence-building exercise. As a qualified electrician, experience and expertise are key drivers when it comes to scoring a job. One thing’s for sure — the customer is unlikely to have the skill or the time to do it themselves. They just want the problem solved, and solved quickly. If you know you do a better-than-average job, you need to value yourself and your skills in line with the quality of the work you do, and the value you deliver.

How to raise your prices: Consider the competition

Do you have a good understanding of what other tradies in your area are charging for their services? The average hourly rate for sparkies in Australia varies hugely depending on the specific job, the worker’s experience levels, and the location. A new recruit in a country town might charge $60 an hour while an experienced city pro will be on at least double that. Do some research and find out what the going rates are in your neighbourhood so you have some context.

How to raise your prices: Tell your customers

And now for the tricky part. Communicating a price increase is never a pleasant task.

Start with the easy bit — charging new customers your new rate. When telling your existing customers, the best thing you can do is be forthright. Explain the reasons behind the price increase (rising cost of materials, labour, overheads, training, etc), and remind them of the value they’re getting for the price. If you can, give advance notice of two or three months.

How to raise your prices: Be transparent

When setting new prices, detail what’s included in the cost. Set out clearly what is included in the price and any additional costs that may be incurred along the way. And don’t forget, you can always negotiate. Customers may be prepared to pay more if they’re on a tight schedule, and you might consider charging less if they’re flexible with the deadline.

Case study: How to raise your prices

Electrician Bernie Lantern runs PD Electrics in Craiglie, QLD. He’s been in the biz for more than 40 years and is no stranger to rising prices. “I started out as an apprentice in the ’70s, working for the Public Transport Commission in NSW. Fuel was around 20 cents a litre from memory, and a packet of cigarettes was 50 cents. So, it’s fair to say I’ve seen a fair few price rises in my working life! “When looking at setting or increasing your rates now, there are plenty of places you can go for inspiration. Master Electricians and NECA both publish average hourly rates being charged for everything from domestic to work to hi-tech and specialist services such as marine electronics. And the market talks itself if you ask around. Another good source is to look at what the suppliers are charging out their own services at. “With the cost of living going up, and a shortage of labour, we’re seeing prices for electrical work going up, that’s a given. My advice to anyone thinking about an increase in their hourly rate is to be straightforward about it. Everyone realises that fuel and insurance costs are rising, so it’s hopefully not going to be a big surprise to anyone. I recently put my kilometre rate up from 50c to a dollar. I don’t travel huge distances so it’s not really a lot, but it helps. “At the end of the day, you can charge what you’re worth. If you’re good at what you do, people will pay the price.”