Having to raise your business prices from time to time is a struggle every business owner will face. While it must be done for a company to grow and thrive, many people hold back for fear of upsetting or alienating their current customers.
As daunting as a price increase may seem, especially if you have a new business, raising prices is crucial to the growth of a company. If done strategically, you’ll be able to keep your customers happy too.
Believe it or not, raising your prices can have benefits for your customers too. An increase in profitability will allow you to improve the product or service you offer. Higher prices will distinguish your product as premium or better quality and help you build a better customer base.
So, today in this article, we will see how to increase prices without losing customers. We have got 12 ways to raise the prices without upsetting your customers.
12 Ways to Raise Prices Without Upsetting your Customers:
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1) Check Your Industry:
Is it time to raise your prices? Compare your financials, current pricing, and the quality of your product or service against your competitors. Then ask yourself:
- Do you have more work than you can accept?
- Do your competitors charge more than you do?
- Is your cost of business going up?
- Is your product unique?
- Has it been over a year since you last raised your prices?
If you answered yes to all or some of those questions, then it may be time for a price increase.
2) Have a Clear Plan
When it’s time to increase your prices, be sure to strategize by reviewing your cost of business and plan for the ups and downs in your market. Raise your prices enough that you don’t have to do it too frequently. This is when you may start to lose your customer’s trust.
3) Add Fees
One way to avoid raising the price of your service or product is to add or increase fees instead. This is a good tactic for a temporary price increase because you can easily eliminate or reduce the fees when you need to. Utility and cable companies are well-known for charging fees.
4) Offer Price Tiers or Options
Give your customers more options by offering different levels of service or bundles of product at tiered prices. Consider offering your product at different price points, using a good/better/best strategy. This gives your price-conscious customers a lower price point they can be comfortable with while allowing you to reel in the customers who are more willing to pay for a premium service.
5) Pick the Right Time
When you raise your prices, make sure you’ve considered the growth stage your company is in and your sales cycle. If your business is seasonal, you can entice customers with lower prices during your slow season and maximize revenue by raising prices when the demand is high.
6) Raise at Intervals
Raise your prices incrementally to see how your customers react. A good example is Starbucks, who raised its coffee prices 3 times, by about 10 cents, within a 3-year time frame.
7) Give Two Months Notice
No one likes to see a price increase, especially if it happens without warning. Don’t blindside your loyal customers with a surprise bump in rates. Instead, give them two-months notice so they can work the new price into their budget.
8) Charge Only New Customers
Charge your higher rate to new customers, but thank your loyal current customers by notifying them in advance of an upcoming price increase. You can also allow them to stay locked in at the lower rate for a period of time.
9) Increase Value
If you raise your prices, justify the price increase by also increasing the value you provide for your customers. You can do this by offering a better quality product, adding features to your existing product, or providing customers with a better range of products to choose from. If you’re a service provider, think about improving or offering extra services. Choose extras that cost little but offer a higher perceived value to your customer.
10) Be Transparent and Specific
Your existing customers should be informed and made aware of why you raised your prices. Be honest and answer all of their questions or concerns. Many will be understanding and appreciate your transparency.
11) Explain Your New Pricing
Clarify to your customers how the price increase is fair for the cost and value of your product. This goes back to having a clear plan and pricing strategy. With that, you’ll be able to confidently explain why the price increase is necessary.
12) Have Confidence
Don’t apologize for having to raise your rates. Instead, emphasize the value you bring to your customers. Explain to them any added features or services they may not be aware of. Know what you’re worth. If your price increase is strategic and numbers-based, then you’ll feel good about charging appropriately.
How to Deal with Upset Customers?
Inevitably, you’re going to have some customers that are upset with a price hike. Here are some tips:
- Ask your customer questions to reveal their biggest problem or need. Sometimes customers simply need to vent. Other times, the complaint may not actually be price-based. Listen patiently and try to diffuse the situation.
- Offer the customer multiple options and different price points. Depending on what their needs are, you may be able to come to a solution that’s a win-win.
- Confirm the benefits of your price increase. Remember not to place blame but to always emphasize the value you provide.
It’s easy to make excuses not to raise your prices, but in order to grow as a company, a price increase is inevitable. That said, raising your prices doesn’t have to be scary! Your pricing should reflect the added value or rising cost of business. Customers are often willing to accept a reasonable and justifiable rate increase without making a fuss. If you follow these tips as a guide, you’ll be able to increase your prices and keep your loyal customers happy.
Note: This is a guest post by Jessica Leone. If you have good content to contribute, then check our Guest Blogging Guidelines.