There will come a time in your business – and probably more than one time – when you will have to raise your prices. Increasing supplier costs, increased wages, and the need to make more profit generally will be behind your decision. You should never feel guilty for doing this; it’s your business, and if you want it to make more money then there is no reason why you shouldn’t.
It can be a worrying time, though. The fear is that by increasing your costs, you will lose customers. Sometimes that does happen; customers whose only thought is price will certainly look elsewhere. Yet this won’t be what all customers are thinking of, and therefore there are ways that you can raise your prices and keep your customers at the same time.
Here are some ways it can be done.
1. Be Honest.
Don’t try to hide the fact that your prices are going up; let your customers know in advance. This will give them time to get used to the idea in the first place, and to assess how much they enjoy buying from you. Although the initial announcement might be a shock, if they have time to digest the news many will determine that they are happy with your service and would be willing to pay more for it.
Those who are concerned with cost will have time to look elsewhere. It might be that they can’t find anywhere that can offer them what you can, even at the raised price, which is great news for your business. If they can, the fact that you are giving them the chance to negotiate and work out what they want to do won’t go unnoticed, and they won’t leave under a cloud meaning that they won’t be embarrassed to come back to you if they decide you are a better option after all.
2. Give Reasons.
Putting up your prices is something that all business owners will need to do once in a while, and the majority of them will do it and not give their loyal customers any information about why. This could be a big mistake, and it might be what drives those customers to another company or website.
Although you don’t have to let your customers know your reasons for increasing your prices, it can be a good strategy to do so. Give them the truth about rising energy costs, rents, production costs, the cost of living, the fact that you want to pay your staff more, or whatever other reason you might have (as long as it doesn’t sound greedy or self-centered which will put people off) and they will understand. They might even have had to deal with similar issues themselves. Although this won’t mean that you keep all of your customers, it will mean that those who value what you do will stay and will pay the new prices because they understand your reasons and agree with them.
3. Offer More.
If you simply put up your prices and don’t offer anything, in addition, it could be understandable, particularly if you have explained the reasons for the price rise as mentioned above. Yet even if it is understandable, it might not be well received.
If you can offer something more to your customers so that they agree to pay the new prices because they are receiving something in addition to what they were getting before (and therefore get the impression that they are getting more for their money), then this could be the sweetener you need to keep as many customers as possible.
The key to getting this strategy right is, of course, not to offer something that will wipe out any additional profit you might be making by raising your prices. Some ideas include starting a loyalty scheme that offers points for each purchase which add up to a free gift or some money off. You might invest in software design services that make your website more streamlined and easier to use – this certainly won’t be unnoticed. Or you could include delivery in your prices, for example.
Look at the ways you can give better value to your customers without spending much money, and you can increase your prices without worrying.
4. Add A Lower Cost Option.
If price really is a concern to some customers, then why not give them a lower cost option? This option will be of less value than the original, and they will be able to compare the two options and determine then what they think of the price. If they want to pay less, they will have to opt for the product that has less value. If they don’t mind paying more, they will opt for the option that is ‘better’. It is their choice, and you are giving them a clear decision to make.
For those who are price conscious, having a lower cost option can stop them from leaving your company altogether. Yet it could also do something else. When a customer is able to directly compare a good quality product with one of less value (in whichever way this is determined by you) they will be able to immediately understand what the extra money they could pay will get them. Some will then realize that paying more gives them a lot more, and they will be happy to pay the higher price. If not, they can still buy from you, and you will still make a sale albeit a lower profit one.
5. Over Deliver.
Before you raise your prices, make sure you are over delivering. Not only will this gain you a good reputation and increase your customer base, but it will also mean that when you do raise your prices people will not be surprised; the better a business you are and the more you do, the more people will understand when your prices go up (as long as they don’t go up substantially – incremental increases over time will be best).
