Most of us have heard of ‘Supply and Demand’. A few of us have reached the point of our own businesses being simultaneously ‘overworked and underpaid’. So isn’t it time to apply the theory and improve things for ourselves and our customers?
Let’s do a quick refresher on supply and demand. You can check the full description Wikipedia, but here is a translation:
If you have more work and more opportunities in your pipeline than you can easily handle, then the demand exceeds the supply. You are overdue to change something. You have 3 choices:
- Flail and fail: Continue to price your services at a point where you cannot cope with the inbound work. You will be exhausted and your customers will be disappointed because running long distance on empty does not work!
- Increase supply: Not so easy when ‘your’ services are the primary product. Scaling up may be some people’s dream, but others (like me!!!) were happier to see the back of their employees than their bosses when they left corporate life.
- Increase prices: Now there’s an idea! This should lower the demand to a point where you can meet it.
Assuming that your choice is to raise prices, be aware that some of the ‘opportunities’ in your pipeline will choose not to pay the new prices. And that is OK. That is, in fact, very OK It is even the whole purpose of this exercise – some will go but enough of them will choose to pay to keep you busy. Busy enough, but not too busy.
Benefits for you:
- More time to concentrate on fewer clients.
- Better compensation for the time you are working.
- Choice of whether to hire more and share the benefits of your business
Benefits for your clients:
- Better service from your business
- Better quality in the services purchased
- More reliable service since the business will be more ‘available’
You know how this works on the famous little graph, right?
1. You were, at some point, producing Quantity Q1, at price P1, which satisfied the market demand, D1.
2. Demand went up to D2. Sweet! People liked your product!
3. So either you get to increase the Quantity or increase the Price, or… sell more than you can supply and flail in the gap.
If you are lucky enough to find yourself overworked and underpaid, I hope that you have the courage to cross that gap and make a change. I am. And when it comes to that famous little graph, I am excited to finally apply with my actions something that I learned with my mind decades ago and 6,000 miles away in high school. Won’t that be something?