1 Biz Experiment You Must Try Now!

Let me tell you a story...

It’s about a small town, physical security company in Midwest America. Their revenue was decent and they had a good team, but not much profit left over at the end of the year.

As their growth consultant, the first thing I suggested was a price increase, naturally. This is not earth-shattering advice. Nor was the push back they gave me. Just like many other struggling business owners, they swore there was no way they could raise their prices without losing customers.

I listened to their tale about how competitive their industry is and how all the providers charge about the same thing. Their main service was to have live security guards drive through apartment complexes and shopping centers throughout the night, looking for suspicious characters and illegal activities.

I showed some compassion, not my strong suit, and started to push past this common gut reaction from operators. I didn’t push with demands and ultimatums. I pushed with questions. I asked them things like:

• What extras could you easily add to your service packages that would make a higher price feel justified, without adding too much work or expense for the company?

• Could you make a safety video to distribute to the residents/employees?

• Could you make a pamphlet with what to watch out for as you’re going from your car to the building?

• What about a quarterly safety class?

Then I dug deeper into all the services they offered. Was it just late night parking lot prowling? As it turned out: No.

And this is where the magic started happening...

A secondary service they offered was “emergency security”. These jobs would arise when a shop or store did not have any alarm system or security in place, and then experienced a break-in. These shop owners would obviously be freaked out and would want an armed guard on duty all night until the repairs could be made and an alarm system installed.

Perfect!

My next question to the owner was, “When you get these emergency calls, and give them a quote over the phone, how often do you get turned down because your price is too high?”

“Oh, we sign almost every emergency call we get” was the quick response.

💥 CPA Hot Take: Getting every sale may sound like success on the surface, but it’s not. Let me repeat that. Unless you’re Dollar Tree, getting a sale from everyone that walks in your door is not a good sign. It definitely means your price is too low.

I already knew my client was against raising prices, so I tread carefully, but I knew I had found the spot. Instead of charging into the little tirade I just gave above when I threw Dollar Tree under the bus, I went with another question.

“Would you be willing to do a small experiment with me?”

An experiment!

Sounds fun, right?

Sounds temporary, right?

Sounds non committal, huh?

I always try to lead clients into a price hike with an experiment. It’s much easier to swallow when you're hesitant to take such action.

So this is The Experiment I proposed:

For the next 5 emergency service calls you receive, calculate your normal quote, THEN add just 10%.

5 calls.

10%.

That’s it.

Guess what happened on those 5 calls?

Nothing!

Well, nothing different anyhow. She didn’t lose a single client. No one said no.

Experiment Number 2.

Do it again, but this time add 20% to your old pricing structure. I know you’re with me now, and you’re right. Even at a 20% increase in price, she still got every emergency job she quoted. She ended up bumping her rates by about 30% or so, for the exact same work!

Again, if every single prospect says yes, your price is probably too low.

One more quick story on pricing.

This one was from another CPA who wanted to start winding down his practice. His brilliant idea was that if he simply doubled his prices, about half of his clients would leave. But he thought half would stay, and he would be making the same amount of money for half the work. Brilliant, right?

Wrong!

He did double his prices, but only a handful of clients left! Can you believe that? Now he was making twice the money for the exact same amount of effort. Ooops:-)

Good problem to have.

Now, I want to hear what pricing experiment you are going to try this week!

Let me know your plan, and then I want to know all about what happens in your business.

Go Make Money!