Many ask me how and when to raise prices. In this episode, you'll learn how NOT to. The story I am going to tell in this episode is real and happened recently. I am protecting the identity of the solo cleaner by calling them "Jen". Thankfully, this story ends well. Take heart and do NOT copy Jen's mistake
What did Jen do and why? I teach a proven strategy for how to raise prices in my ISO Model. I've been using this strategy since 2006. It's smart. It's battle-tested. It's strategic. And it's for optimizers ONLY! Jen is not an optimizer yet. Jen has a solid stabilizer business with around 20 clients. She loves her business and has amazing, loyal clients that will stay with her long-term. All she has to do is continue to serve them. These clients will absolutely pay more per visit over time as every business raises prices as the cost of doing business increases year-to-year. Jen got a call from a commercial property manager. She heard about Jen and wanted her do electrostatic disinfecting in multiple buildings. It was a huge opportunity for Jen and the promises sounded like a pot of gold at the end of the rainbow. At the same time, Jen was in an emotional state as a close family member was in an accident and required a lot of Jen's TLC. Jen really needed to make more money and have more time. In Jen's excitement at the prospect of the commercial disinfecting, she hastily sent price increase letters by email to half of her reliable, recurring house cleaning clients. Jen thought that some would not say yes and others would not. It would earn her more money per house that stayed and clear up enough time to do the disinfecting work. It was a perfect plan in Jen's mind. But was it?
Here's what happened next. One client fired her. One grilled her for 3 hours during the next cleaning and found out that increases were only sent to half of her clients. One prepared to fire her. She had not heard back from the others yet and decided it was a good idea to reach out to me. As she explained her actions, I panicked with her as I heard so many missteps. Jen could literally lose half of her business in 1 week!
Let's analyze. There are two pieces to analyze. First, let's look at the huge pot of gold in the commercial opportunity. I talk about this in detail in Why Do Good Cleaners Go Out of Business? Jen fell for the trick. She is a good cleaner with a solid business and the appearance of an easy way out or a shortcut deceived her. I asked Jen these questions. "Jen, are you insured to operate this janitorial code? It will cost more. Jen, are you properly trained on using the equipment to ensure your safety and avoiding lawsuits? Jen, do you have the capital to invest in the equipment for this amazing work? Jen, do you have an employee handbook, hiring and firing systems, and worker's compensation to bring on a team to help you do this work as it grows? Jen, how confident this work will be there if your contact leaves her job, you get underbid, or this level of disinfecting isn't needed as COVID-19 goes away in the future?" Jen had nothing to say except, "Um, that was dumb of me." There's a second piece too. As I mentioned, I teach how to properly use the Optimizer's Tool called Price Increases. My system requires that 7 sub-parts be fulfilled entirely before using this tool. I'll list the 7 so you hear them: Timing of the Increase, Trust of the Client, Recurring Client Profitability, Options for Not Accepting the Increase, Time to Budget, Fully Stocked Waiting List, and Total Client Inclusion (not Exclusion). The point of this podcast is not to teach you how to raise prices. I have a system for that. If you'd like that training, join the Solo Cleaning School Elite Membership. I will hit on a few of the 7 briefly. Timing of the Increase: Jen raised prices during a pandemic and prior to a major presidential election for all the wrong reasons. Some of the clients she raised prices on were dealing with some hefty personal stuff as well. The timing was awful! Time to Budget: Jen gave her clients 14-21 days to make a decision. Ouch. I suggest 45-60 days. Jen had 2 of 7 and pulled the trigger. I would have told her this if she asked me first.
Here's what I encouraged Jen to do. "Jen, do you understand what you did wrong?" She did and asked for help. "Do not waste any time! Go to every one of your clients that you sent increase to in person if possible. If you cannot meet in person, call them! Tell them that you made a big mistake sending our price increases during this time. It was extremely insensitive with everything going on. I've been going through a lot emotionally and I made a mistake. I'd like to forget about the increases and continue as we were. Again, I'm really sorry!" Jen took this advice to heart and agreed with me.
Here's the result. Jen personally called or met in person with every client she sent a price increase. Every one of them took her back. In fact, one of her clients accepted the price increase. Jen learned a tremendous lesson and fortunately for her solo cleaning business disaster was averted, but it could have been prevented with sound decision-making based on what we know to work. Again, if you'd like to access the training that teaches the right way to raise prices as well as my entire ISO Model to building an optimized solo cleaning business, visit my Elite Membership Webpage.
Ken Carfagno optimized his first solo cleaning business to $60,000 annual profit working 2 days per week without employees, sold it for close to 6-figures, and is currently following his ISO Model to do it again in a different state! This podcast will equip you to do the same!