As business owners, taking care of our customers is our number one priority. Because of this, we can feel apprehensive about raising our prices, even if we know our product or service is worth more.
However, it’s entirely possible to raise your prices without upsetting or losing your current customers. It all comes down to the way you approach the change and how transparent you are. So, if you’re unsure about how to raise prices in your business, read on to learn the best ways to increase costs and keep clients.
Study your competitors’ prices
Whichever industry you are in, it’s worth staying up to date with the market rates for your product and service. Look at the current prices or your competitors and compare them with your own. Also, investigate if they have raised their prices recently.
If you find a trend of recent price increases among your competitors, this is good for you. In this case, your customers will more likely react amicably to the rise. On the other hand, if you find no one else is raising their prices, consider what is unique about your offering to justify the price difference. Then, you can market based on your USP so that your customers see your product or service is worth paying more for.
Everyone appreciates honesty, and your customers are no exception. The quickest way to lose clients is by being sneaky and increasing prices without telling anyone. Therefore, tell customers about price increases in whichever form of communication best suits your business.
One of the best ways to tell customers about price increases is to send them a price increase letter. This allows you to explain your reasoning. Be honest about your reasons; for example, if your supplier costs have risen, state this.
You don’t need to go into detail or share any figures; keep it simple. Most people know that inflation is high, and although they may not be over the moon about having to pay more, they will be more likely to understand and accept it in this way.
Let customers known in advance
If you want to know how to raise prices by causing minimal impact, give your customers notice. For sure, you may still lose some price-conscious consumers, but in general, giving your clients a heads up will make them feel that you do value your business.
Depending on your business structure, you could use this as a smart way to retain customers. For example, if you offer long-term contracts, allow your clients to keep the old price for another six months or one year. Of course, to do this, they will need to renew their contract before the price increase comes into effect.
Don’t say sorry
You may think that good customer service means apologizing for any inconvenience your customers experience from the price increase. However, saying sorry is actually one of the worst tactics when it comes to how to raise prices successfully.
You should always come across as a respectful and confident authority figure in the eyes of your customers. By apologizing, not only do you appear unsure and nervous. Customers may think this means that it is negotiable. The next thing you know, you’ll have dozens of customers calling you to try to talk you out of your decision.
Add fees instead of raising prices
You may prefer to implement the price increase via adding fees rather than changing your product/service price. However, bear in mind that this will work well in some fields but not in others. Industries where fees are standard, like utility companies, often increase prices in this way. What’s more, if you’re wondering how to raise prices temporarily, this can be a good tactic as you can easily remove the fee when you want.
Only increase prices on some products
You may not need to raise business prices throughout the whole company. Instead, you can increase the cost of your most popular products or services, as these are the ones that create the most revenue. This may help to prevent your brand from seeming expensive overall.
Raise prices slowly
Another way to reduce potential backlash from customers is to increase your prices in stages. With this tactic, there will be multiple price increases, but each one will be small. This is an ideal strategy if you need to drastically raise your price.
However, for a good chance of this working well, you will need to elevate the cost over a relatively long time so that your customers do not feel the hit. Therefore, if increasing your prices is an urgent matter, attempting this strategy could actually make you come across as trying to be sneaky or greedy.
Offer more value
If you’re still worried that you will lose customers when you put your prices up, why not add additional extras to your current product or service? Consider what high-value offerings you can include that won’t cost you much in terms of time, effort, and money.
The extra value you can offer will depend on your type of business and services. For example, if you include a warranty with your product or service, you could extend that at no extra cost. Whatever industry you are in, learning how to raise prices in clever ways like this will keep your customers happy and eliminate your stress or anxiety about the business change.
As you can see, there are plenty of innovative ways to raise your prices with minimal impact on your customer relations and business revenue. However, with that being said, when putting your costs up, you should always expect at least a few unhappy customers.
As a business owner, you know just how impossible it is to please everyone. Therefore, don’t waste your time and energy trying to make amends with those who won’t accept your explanation and honesty. Plus, you may even find that increasing your prices attracts new high-quality customers who prefer to pay more to get better quality.