If increasing your revenue is one of your business goals in 2023, it's something you can achieve. While it's not hard, it does take work and time to achieve. This may get a little lengthy, so fill your mug or glass and settle in as I walk you through how I increased my average sale revenue by 400%.
A little background...
In my former career, I was a full-time professional photographer. Unlike many industries, there are no regulations, or industry standards as far as business operations or pricing, so you'll find a rather large price disparity among photographers. Essentially, anyone with a camera could charge someone any amount of money for capturing photos for them, with or without a business license or oversight.
When I first started my business, I fell into the trap of setting my rates low - I was new to the industry and felt I should charge less than experienced professionals. After the first year, I realized my operating expenses were not being covered by my business income, so I slowly raised my rates to what my competition was charging. While the business was bringing in enough income to cover operational costs, when I took a deeper look into the business profits, I found that I was earning an income of approximately...$3/hr!
The realization hit: if I wanted to make a sustainable business, things were going to have to change. This is where the first part of the work came in. While you may be in an industry that has parameters around what you can and can't charge, there are other things you can do to increase your sales revenue, so keep reading.
MENTAL BLOCKS
Mental blocks cause barriers in your thoughts, beliefs and actions because of a psychological obstacle or limiting belief. These can include fear, scarcity, imposter syndrome, perfectionism, money and comparison blocks among others.
These may be conscious blocks based on past experiences, or may have developed subconsciously going all the way back to your childhood observances. Unfortunately, you may have mental blocks that you are not even aware of, or carry certain feelings that are holding you back in business. It requires you to actively look into your beliefs, digging back deeper and deeper to find the root cause and then question the thoughts you have. There are coaches, books and websites that can help guide you through this process. I'm going to walk you through a few mental blocks that I discovered personally so you can see how this process worked for me.
One of the first blocks I uncovered in myself was a block to accepting money. Through careful questioning and journaling I uncovered the following:
I grew up in a household where both parents worked multiple jobs, we were on a budget and lived a modest lifestyle. My father owned a seasonal tax return business as well as worked a full-time job. He instilled in us the importance of saving. I recalled a specific dinner conversation where my father announced he had lost his job and I remembered the gravity of that conversation.
This was my first awareness on the importance of income and the potential for loss. Over time and with other messaging, this developed into a scarcity mindset. In my own business, it also manifested itself in me not feeling worthy of accepting more than anyone else for my services, even if that meant I would only earn $3/hr...
This was the second mental block I uncovered: my value.
I knew I was good at what I did and I ran an honest, reliable, trustworthy, communicative business - I truly want the best for my clients. I booked 95% of the people who inquired into my services and had a great reputation in the community.
Why, then, would I even consider changing a single thing and risk my business? I'll tell you why:
I worked long hours, put in a lot of time and energy into providing a positive experience with a beautiful end product for each and every client. I invested in myself and my business, hiring part-time staff. I was the personality, experience and producer of the end product being sought after. And I believed I was not replicable. (I later found this to be another mental block that I may explore in a future blog post). And while I knew that I deserved an income greater than $3/hr, I couldn't reconcile that with what other professionals were charging. There was more to uncover here.
I did a lot of questioning surrounding my value and uncovered this:
Around the same time I was doing this work, my father had become unexpectedly ill with an unknown condition. Within three months, his body failed him and unfortunately, he passed away. As I gathered photos for the funeral service, I pulled up the family photo session I had captured just 7 months prior to his passing. My breath caught as photos I had forgotten I captured of him alone that day came up on my computer. One of those images became the 16x20 print used on the altar at his funeral and is still hung on my mother's wall.
Six months later, a family friend and client passed away in his sleep at the age of 56, leaving his wife and two teenage boys behind. I had captured all their family photos and his headshots over the years and was asked to send photos of him to the church. On the way into the funeral service, I was handed a program with all (and only) the photos I had captured of him and his family over the years. The impact was profound.
As I considered those two scenarios, I asked myself this: "What value do I provide?" If another photographer had captured that last smiling image of my father and offered to sell me that photo, what would I have paid for it? My answer: $1,000. Without question. So why was I stressing over changing my rate from $40 per image to $100?
I spent a lot of time considering the professionalism I provided in terms of service and product. I considered what I would pay for such services. I asked myself what I would fairly pay an employee to work the same job I did and made sure I understood that I deserved at least that much as well. I asked myself if I was willing to take the risk in changing my business model and pricing if it meant I would only earn 10% of new business rather than 95%? How would I handle the constant rejection and comments about the expense of my services?
I questioned and questioned until I came up with something that felt true for me. I brainstormed ways to increase profits and add value to the client experience without adding too much cost. I asked if I could accept that money? If my clients needed a photographer, I knew what I could give them and I truly wanted them to hire me... at a price that provided me a fair income for the work performed. If I didn't correctly communicate my value, or if the client was unwilling to pay my prices, they would go elsewhere. And I accepted that.
Was it scary? Heck, yeah! But, two things kept me moving forward:
Working at the pace and intensity I had been working at for little profit was a path to burnout.
I focused on the value of the work I did.
PRICE CHANGES
You can likely tell from the value work I outlined above, I made some changes to my pricing in order to create profit in my business. Simply stated, here's how this mapped out:
Determine business expenses. Regardless of what others are charging in your industry, you need to know your numbers. This includes your computer, website, phone, software, office overhead, auto, printed materials, networking dues, equipment, supplies, insurance, business license, etc. All the costs associated with running a business.
Cost of goods sold. For those who sell a product, what is the cost you pay for the products or materials used to create your products?
Time: this includes the time working on a specific project as well as non-billable hours, which is your time working on the business that are not directly billed to a specific client. This includes time you spend marketing, completing your financials, prospective client meetings, trainings, etc.
Experience. The amount you charge should be impacted by your experience and expertise. The more experience you have, the more you should be able to charge because the more skilled you are and the faster you will work. This will bring more value to your clients, and you should be compensated for this.
Market demand. Take time to research your market to see what the general going rate is. You'll often find pricing can be all over the place, but you want to see what the majority is charging. Will the market bear a higher price of the goods or services you sell? The answer may be yes, but keep in mind you will have a smaller market pool that will be willing to pay for it.
You should always be looking at ways to increase your profits via reducing business expenses, cost of goods and creating automations to streamline your business operations. Overall, this helps you set the best price for your business.
As I mentioned before, I took a premium pricing strategy on my work. I changed my messaging to focus on value versus pricing. I added additional services and products that enhanced the overall experience and deliverable products. My goal was to exceed my customer's expectations and build a loyal client base, which I was able to achieve.
SALES PROCESS CHANGES
The last component I changed to increase sales revenue was the sales process itself. As I mentioned, I had blocks with value and money. As you can imagine, this made the sales portion of my business very difficult for me. I was truly awful at sales. I knew people who were great at sales, so I hired them to work with me on certain projects. The rest of the time, I did what I could to avoid selling. It was the equivalent of giving a client a digital catalog and asking them to let me know when they selected what they wanted. Not surprisingly, most of my sales were the smallest package.
I knew I needed to do something different. And I found the right recipe.
Eliminate the digital white noise. People are inundated with electronic media and distractions on an hourly basis. Offering a digital catalog put my clients on their devices where they were easily distracted. Creating a time and place to meet in person allowed for an almost distraction-free, personal level of service.
The value of digital content? We are able to create digital content from the palm of our hands every day. And, we digest so much digital content, it's perceived value has diminished over time. Presenting a physical version of your product or service provides a sensory experience so the customer can get a feel for the quality, size, shape, color, etc. of the product you are offering.
Limit the options. Would you rather see 118 product options, or the top 30 perfectly hand-selected for you? Limiting the options to the best-of-the-best shows you understand your client's needs and are delivering what they want.
It's hard for them to let go. When a client is faced with physically letting you leave with the product(s) they want, it becomes easier for the sale to happen without having to sell it. This was how I began to love the sales appointment. I got to enjoy the products with them and usually my role was helping them narrow down what they didn't want.
In addition to individual product offerings, make sure you offer packages. You'll want to structure your middle package as the best value. It's also important that you always send potential customers your price sheet before you engage in any services. I recommend outlining your pricing in the service agreement if you have one and send them the pricing again when scheduling their ordering appointment. I also stated that anyone who wanted a say in the decision making needed to be present at the appointment. I sent them the price list one more time attached to the 24 hour appointment reminder e-mail. So, my clients received the price list 3 times.
Guarantee. I chose to offer a my clients a guarantee - they paid a session fee but understood they were under no obligation to make any purchases, nor were there minimum purchase requirements. If they didn't like the products, they were not required to buy. If they chose to buy and met a specific dollar amount, they were credited part of their session fee toward their purchase. Clients like this because it gives them assurance that if I don't provide what they want, they are under no obligation to buy or do not need to spend over their budget.
After implementing these strategies in the largest segment of my business, I immediately increased my average sale revenue by 400%. Where my largest sale to that date had been $800, after these changes I started seeing high end sales of $3,000 - $5,000 per client. And my average sale went from $425 to over $1,600 per client. As an added bonus, I worked a tiny bit less, but made more profit.
If you are looking to increase your average sale revenue, start doing the work outlined here. If you need help talking through your blocks or strategizing changes, contact Core Marketing Now.