Question for those who've made the transition from solo to having employees. How did you adjust your pricing? My costs obviously went up with payroll, benefits, etc. but I'm worried about pricing myself out of the market here in Albany. NYSEG and National Grid accounts are competitive enough without raising rates. Did you absorb the extra costs initially or pass them through immediately?
Pricing strategy when you have overhead vs solo?
Gail, I gradually increased rates over 6 months when I hired my first person. Explained to existing clients that I could offer faster turnaround and better service with additional staff. Most understood, especially on the larger CL&P accounts where they wanted quicker results. Lost maybe 10% of price-sensitive clients but the efficiency gains more than made up for it.
I made the mistake of not raising prices soon enough. Absorbed the extra overhead for almost a year thinking I'd make it up in volume. Bad move - just worked harder for the same money. Finally raised rates 25% and positioned it as "enhanced service with dedicated team members." TVA territory here in Knoxville actually responded well to the team approach concept.
Terry's right about not waiting too long. I raised mine immediately when I hired in Denver. Xcel Energy commercial clients here actually prefer working with firms that have multiple people - makes them feel like they're getting more professional service rather than dealing with a one-man operation. The overhead costs are real and clients who value quality will pay for it.