How to Increase the Value of Your Service

The following is adapted from Founder, Farmer, Tinker, Thief.

After establishing your company in what I call the Founder stage, your next step is to become a Farmer and grow it. To do so, you need to raise the value of your service.

As you improve your service, its value will also increase. That means raising your rates, adding upgrades, or diversifying into new services. The more you increase the value of your service, the more you can charge for it, and the more you charge for it, the more likely it is that your weed clients—those with the least potential to bring in higher revenue—will drop off on their own.

Improving Service While Retaining Your Core Identity

It’s important to note that you must deliver your core products before branching off into new revenue streams. No one will order Uber Eats food delivery if they’ve just taken a ride in a dirty Uber, and no one buys expensive shampoo for a lousy haircut. In the Founder phase, you should determine your core services for two reasons:

• To spend time working on what your clients actually want.
• To avoid wasting time on things your clients don’t want.

Constant improvement to your service means a continuous increase in value. And that means constant upgrades in price. Nearly a third of all mentoring clients we serve at Two-Brain Business have had to go through a tough rate increase. They typically struggle because:

• The entrepreneur was projecting his own budget onto his clients and believed they couldn’t afford the new rate.
• The entrepreneur waited too long, and his clients were anchored into the old price.

Both of those problems were solvable, but the emotional toll on the owner and client was higher than it had to be. The easy solution to solving both problems is to make automatic, incremental upgrades to your rate every year (like 3 percent, for example.) Then you announce your “2021 Rates” when necessary. But if you HAVE waited too long, there’s a proven process to make a rate hike of 10 to 15 percent. We’ve used this strategy with hundreds of clients successfully. While the delivery might differ by industry, the approach is useful across the board.

Calculate how much each client SHOULD be paying to create your “perfect day.” Base this calculation off 150 clients. More isn’t better.

Determine a date for the change. You’ll want to give members about ten days’ notice: enough to be forewarned, too little to ruminate. Note: if you have a cancellation policy larger than ten days, you have to provide longer notice than the cancellation period. And if someone’s on a long-term contract, you have to honor that contract. Good luck.

Spread the news. Post about the change on your blog, share on your FB page, and email to all members. Eliminate any possibility that a member won’t find out. Delete those posts after the change occurs so future members don’t see it.

Email the “worst offenders” personally. There should be fewer than ten here. Follow the same template, but add a dollar value: “Your discount has resulted in a savings of $830 per year, or $4150 since we moved out of my garage…”

Now, the tough part: overcoming YOUR fear. Most of the awkwardness, resistance, and anger you’re picturing in your clientele are really just the fears you’re projecting onto them. So we’ll cut straight to the worst-case scenario.

What’s the Worst That Could Happen?

Calculate the projected gross revenues if a client moves to the new price without discounts. Let’s say it’s going to be 100 clients × $150 = $15,000.

Subtract your current gross revenues from that projection. Let’s say it’s 100 clients × an ARM (average revenue per client per month) of $125 currently ($12,500 total.) The difference is $2,500/month.

Divide that difference by the new membership rate. This will tell you how many clients you can lose and still make the same income (with fewer coaching hours, probably): $2,500/$150 (the new rate) = sixteen clients, for example.

Walk through your client list. Can you identify sixteen clients who will DEFINITELY quit when the rates go up? If not, you’re crazy not to do this, especially if your business isn’t providing you with a good living. Prepare yourself to lose those clients (but you probably won’t).

Hit Send.

Call your mentor every few hours with updates. You’ll want to have an emotional backup, trust me.

I’ve been through this with many businesses now. The process gets more refined every time but NEVER comes close to reaching the “acceptable limits” for attrition. Usually, one or two members will drag their heels because they’re scared of change and might even quit. Some might come back. But keep this in mind: the clients, staff, and business required to get you to the “perfect day” is probably not the same one that got you to this point. If you want your business to grow, don’t be afraid to ask people to pay for the true value of your service. 

For more advice on business ownership, you can find Founder, Farmer, Tinker, Thief on Amazon.

When his first business almost went bankrupt in 2008, Chris Cooper sought a mentor and began chronicling his turnaround on a blog called DontBuyAds.com. After 400 blog posts, Chris self-published his first book, Two-Brain Business, which has now sold more than 20,000 copies worldwide. Chris now shares his lessons learned from the trenches of mentoring over 2,000 business owners worldwide in Founder, Farmer, Tinker, Thief.