Price increases are difficult to deliver and can be hard to figure out. I am going to go over some tips on how to increase prices.
Increase prices when your overhead prices increase. For me, my biggest overhead cost is QuickBooks Online. Since all my clients use this bookkeeping software, when QuickBooks Online raises their prices, it directly affects my business in a big way. As most of you know, once again, QuickBooks Online has raised its prices. So, in turn, I had to do what I feel is one of the hardest parts of my business raise prices for my clients as well.
I wrote a well-thought-out detailed email to my clients individually. They each were addressed to them and I made modifications for each email to explain the situation specifically for them. Then I sent the emails out and hoped I would not lose any clients over the price increase that was completely out of my control.
When your business incurs price increases from your vendors you have to turn around and raise your prices. In the world today, there are many businesses having to raise prices due to increased prices from shipping and payroll costs. Another big reason we are seeing an increase in prices since Covid is, the demand for products is higher than the available products being made or available due to many factors. This is causing us as business owners to need to pay for rush shipping to get our products to our consumers in time because availability is low.
Since costs are getting higher, to stay in business we must increase our prices. I personally try to increase prices for new onboarding clients and keep the prices set with current clients. This may not be feasible for all business structures. In the case that it is not an option to increase for some, try just increasing by a small percentage. Of course, you want to make sure you are still covering all your expenses and still making the same income as before. Make sure your price increases are substantial enough to cover your needs. Of course, when costs for your business increase so do costs for you personally so make sure to account for that as well.
Another option is always to look and see if there is a comparative product available for you that is cheaper in cost but not quality. For example, when QuickBooks Online decided to raise their prices, I always do my due diligence and make sure they are still the best program for my business and clients. In my opinion, it is still. The price increases have been made across the board for major bookkeeping software and the quality of QuickBooks Online is much better, still. My favorite feature of QuickBooks Online is being able to do the reconciliation within the program. Other bookkeeping software, makes it difficult to do reconciliations when the program is off. You have done it outside the program because they made the reconciliation "automatic" and it is not always accurate. I have run into issues with most other bookkeeping software when I needed to reconcile the accounts and ended up doing it with printouts from the program and comparing it to the bank statements to see where the error was. This was very time-consuming and took way more time than if QuickBooks Online was the program my client used.
I often find people who do not want to incur the costs of QuickBooks Online and ask me if it is worth it.
The answer is, yes QuickBooks Online is worth the monthly subscription and is still the best out there!
1. QuickBooks Online connects to your bank accounts saving you time not having to manually enter or download your transactions.
2. It has a reconciliation within the program. This is very important. I have personally found clients using Xero or FreshBooks and had major issues because of this feature was not available.
3. The reports! The reports in QuickBooks Online can show you lots of different aspects of your business. This is important for planning and forecasting. Other programs only have the minimum reports and do not have the custom reports that QuickBooks Online offers.
4. QuickBooks Online has the best options for reports. I am often asked by clients to look up more details for a specific vendor, product, or line item. QuickBooks Online makes it very easy to look up the details that they want without having to do a bunch of calculations outside of the software.
5. As your company grows, QuickBooks Online grows with you! Just make sure you do not choose the self-employed version. That version does not offer an upgrade.
6. QuickBooks Online does help you track inventory as long as you’re willing to enter it itinually and then as you buy more of course add the additional inventory in, and as you sell goods, as long as you use the QuickBooks Online invoices or bills it will also help keep track of the remaining inventory.
7. When you do decide it is time to hire an accountant, there are a lot of accountants who love and use QuickBooks Online. In fact, I would say it is the easiest to use for accountants so there is a lot of us who solely only use QuickBooks Online like myself.
Do you feel like this is too much for your business and you do not want to pay the costs of QuickBooks Online? Then I highly suggest using WaveApps. It is free accounting software but honestly, I would suggest you use it over Xero or FreshBooks. Here is why, it at least has reconciliation within the program. I cannot tell you how many times I have had a client come to me telling me they have been using Xero or FreshBooks and cannot figure out how to reconcile their accounts. It is a very common issue and they are wanting to reconcile because their books are off and they need to figure out why. This software is one of the most important steps in bookkeeping, the reconciliation. They are supposed to do reconciliation automatically but it does work right and it causes issues, trust me.
WaveApps does have its limitations though. I will warn you. It is not as user user-friendly or robust as QuickBooks Online. It also does not grow with your business, so if you choose WaveApps just keep in mind, that one day you may need to switch to QuickBooks Online so you can have more friendly robust software. It does work well for those who are just starting out and just need something to give them a Profit and Loss and Balance Sheet regularly for review and at the end of the year for taxes.
As a business owner, you must increase your prices from time to time. It is important that you do it. You also may need to switch your target market when you increase prices so your market can afford your new price tag. Do not get discouraged when you see a new client needing your goods or services and an old client taking a break. It is important for the growth of your business.
When figuring prices, think about the following:
1. What costs do I incur directly to make this good or service?
2. What costs do I incur indirectly to make this good or service?
3. How much time am I away from my family to make this good or service?
4. How much am I worth? Your time is valuable so do not cut yourself short.
5. Who is my target market? It is better for you to market to the higher paying clients so you do not have to work harder for your money. You want to make more per good or service so you do not overwork.
When you consider the above, you will be able to find a price that fits your needs. Make sure you are a to pay yourself so you can stay healthy and happy.
Still wonder if QuickBooks Online is worth the price increase that will be passed onto your clients? I made an easy to review the Pros and Cons of the Bookkeeping Software Table for free! Get your copy today!
Do you still need some help with business expenses? I offer a 6-month course that goes over in detail all the steps of bookkeeping and how to do it completely and accurately. You can also buy the whole package and do it all at once if you would rather spend more time learning it quickly. Either way, it is a great course for those who need some extra support and learning about bookkeeping. It is called Bookkeeping Essentials. It teaches you everything you will need to know to be able to do your bookkeeping in any software. It does show some lessons in QuickBooks Online but those can all be applied to any bookkeeping software. All lessons include a workbook and a video that you can follow along and learn how to do your bookkeeping.