Kiwi businesses often undervalue the goods and services we provide. +MORE Ambassador Jehan Casinader encourages us to rethink our value.
If you were charging $5,000 for a product or service in 2021, how much would you need to charge today – just to match inflation?
I’ve been running a little pop quiz for business owners and leaders. Most have struggled to answer this simple question.
The correct figure: $6,268.73. That’s a whopping 25.4% increase in exactly five years, thanks to inflation alone.
So, here’s another sobering question. Has your business raised your prices by at least a quarter in the past five years?
If not, you’re effectively discounting your offering – and you’re certainly not being compensated for the growth of your expertise, your reputation and your quality of service.
Keeping your prices flat isn’t a “safe” move in an uncertain market. It’s a decision with real consequences for your business.
Recently I was in Queenstown for the MGI annual conference. It was a great opportunity to chat with directors from across the country.
In our conversations, one word kept cropping up: value. Specifically, why are so many Kiwi businesses reluctant to charge adequately for it?
Business advisors in the room told me that it’s hard to encourage clients to price their goods and services at a respectable level.
It’s easy to understand why. Since the pandemic, there’s been a low hum of economic anxiety running through the country. We’re constantly told: confidence is fragile, people aren’t spending, and now isn’t the right time to increase prices. However: if not now, when?
I have a driver who takes me to the airport most weeks. He’s reliable, professional and a cut above his competitors. But since fuel prices spiked, he hasn’t adjusted his rates.
In the short term, that might feel like smart client management. Perhaps he’s hoping the fuel crisis ends quickly. But the maths is unforgiving: his margin shrinks with every trip. If that continues long enough, he won’t just be earning less. He could find himself below his break-even point.
A sustainable business can’t be built by absorbing rising costs indefinitely.
Many employees wait years for a pay rise that meaningfully exceeds inflation. As business owners, we have much more autonomy over how we’re compensated.
In 2020, I left a 15-year journalism career, and started my own business as a speaker and coach. I’ve increased my fees every year since – through the Covid boom years, when cash was flowing freely, but also through the leaner years.
Why? Because each year, my offering improves. I invest heavily in my own development. I understand my clients’ businesses in a deeper way. And the value I can deliver now is greater than in previous years. I want my pricing to reflect that.
Of course, raising prices for the wrong reasons will backfire. Just because a competitor is charging more, that doesn’t necessarily mean you can justify the same rates in your business.
What does hold up: genuine growth in your capability, a better understanding of what your clients need – and the simple reality that inflation has eroded your previous pricing. If those factors are present, you have a genuine rationale to raise your prices.
One of the biggest mistakes we make when thinking about pricing is equating value with time spent on the job.
When a plumber fixes a leaking tap in five minutes and charges $180, you’re not paying for five minutes of labour. You’re paying for the problem to be solved. The time it took was largely irrelevant. What mattered was the outcome.
Recently, a consultant told me they schedule email replies to send an hour later – so clients don’t assume the answer came easily. I understand the psychology, but it’s the wrong solution. We don’t need to pretend we’re putting in more effort. We just need to become confident in charging for the value we deliver.
In my experience, underpricing doesn’t just hurt your margin. It shapes how people perceive you. Early in my speaking career, I was told that if my fee was too low, people wouldn’t book me, because they’d assume I wasn’t very good at my job.
Price sends a signal to clients. And while some will invariably go for the cheapest supplier, many clients will be more likely to trust a higher-priced option, because they’re expecting to get what they pay for.
New Zealand has a complicated relationship with money. We’re not always comfortable talking about it – and we’re especially uncomfortable asserting our own worth. But there’s nothing wrong with wanting to be fairly compensated for high-quality work.
If your prices haven’t moved in a while, ask yourself honestly: has your value increased? Most likely, the answer is yes.
That means the only thing standing between you and a stronger financial position is a client conversation you haven’t been willing to have yet. I reckon it’s time to have it.
+MORE Ambassador Jehan Casinader is a public speaker, communications coach and small business owner. Connect with him on LinkedIn to share your story or insights.
If your pricing hasn’t moved, it’s time to change that. Start the conversation today.
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