Your business reaching the VAT threshold is a good thing for your clients (even when you raise your prices)
A subscription box supplier I use personally recently emailed out to say they’ve had to register for VAT and therefore need to put their prices up.
As a small business, this can be a scary step – and I’m sure they nervously awaited the backlash. As a customer, I replied and congratulated them. Why? Because it’s a HUGE milestone and should be seen as just that – a significant step in their business journey worth celebrating.
Reframe your mindset on the VAT threshold and big tax bills – these are all good signs
The bigger the tax bill = the higher the profits and the more money you took home. These are all good signs for your business. It means you’re in a position to create more jobs, pay more taxes, contribute to society, and help improve the economy.
What’s not to celebrate?
Maybe you’ve caught yourself feeling nervous about a price increase once you reached a milestone event like this. In this country, it seems to be our ‘way of being’ to put people down for doing well. Businesses are scared to have to start charging VAT and raise their prices as result, because too many people see it as a bad thing. Which is sad, because actually your customers deserve a thriving business.
Once again, for the people at the back: your customers deserve a thriving business
A profitable thriving supplier is a good supplier, because it means your business is stable and will be around long enough to continue supplying them. It means you have a good service and you’re good at what you do – which is why they buy from you over your competitors in the first place.
Be proud of your thriving business!
Reframe the conversation – share your success, don’t apologise for it
We hit a huge milestone in January. It was our biggest most profitable month ever. At first I was too scared to share the good news, because of what people might think.
We’re over charging
We’re ripping off our clients
I’m showing off
And so on, and so on. It still feels a little uncomfortable sharing it now. But what I realised is, we’ve worked bloody hard to achieve it! And if we continue achieving at this level, we can create more jobs, provide more opportunities for our team and our clients, and help other businesses achieve the same success.
If you think about yourself as the client – you don’t want an Accountant who is so cheap they’re struggling to survive, because it will have a negative impact on your own success. For one they might have to close, leaving you in a sticky situation.
But most importantly, you want an Accountant who is leading by example, showing you what is achievable and helping you create a profitable business yourself. You want to put your trust in someone who doesn’t just talk the talk, but walks the walk too.
So, instead of sending your clients an apologetic email telling them your prices are increasing because of a major milestone – stop. Take a moment. Reframe. Rewrite your email to include the following:
- Share the good news you’re growing! You’ve reached the VAT threshold, which means business will only be better for the team and clients/customers.
- Because of this growth, prices are increasing by X amount
- If you have a team already, mention how proud you are of their contribution to the business success
- Tell your clients/customers about anything new and exciting that’s coming
- Importantly, thank them for their continued support and custom. You wouldn’t be where you are without them.
Undercharging when you reach these milestones in your journey will hurt rather than help
It can be really easy to fall into the trap of charging less than your worth as you grow your business, because you’re worried about losing clients.
Far too often, we see service businesses undercharging. Though it may not feel like it, going cheap (for whatever reason) and undercharging for the value you provide is often the root cause of a lot of other problems in the business.
Hopefully this blog has helped you reframe some of the negative or pessimistic feelings around these financial stages in your business journey. But raising prices is something you’ll need to come back to every time you reach a new milestone. So if you’re ever in a position where you’re nervous about charging what you’re worth – we have just the blog post for you.