My Market Won't Pay Higher Prices. How Do I Still Make Money?
Raise your prices? Ya, that would be awesome. Charge more and work less? Sounds great! ...but what if your area or your target market can’t pay that higher amount? Or what if you’re just starting out and you don’t have the experience to charge a higher rate?
The best example that I can give you (that I use all the time) has to do with home decor. Both Walmart and West Elm sell couches (...and in this example, I'm not dogging on Walmart). Walmart sells their couches for around $300. West Elm sells a similar couch for around $900. In this example, Walmart has to sell three times as many couches as West Elm to bring in the same amount of money. It seems like West Elm has got it made in the shade, ya? Less inventory, less man hours, less time, for the same amount of money. Guess what though? Walmart continually tops the charts for most successful companies. In 2016, they close to DOUBLED the revenue of the next closest company. William Sonoma (West Elm’s parent company), can’t even compare.
So how does Walmart do it successfully? How can you sustain lower prices and still make money?
Simply put, you cut your expenses and your time. West Elm SPENDS a lot more to create a better quality couch. They use better material, they pay designers to create, and they stylize their shoots and their stores. All of that takes more money (and time). West Elm simply can’t charge the same prices as Walmart because they spend more.
As a creative, if you’re targeting a market that cannot or will not pay West Elm rates, you need to minimize your expenses and time per client so that you can focus on volume instead of value. While you will be spending less time on each client, you'll be bringing in more clients. Lower per job expenses means you're able to put that money in your pocket!