Many business owners find themselves having to raise the prices of their products and services occasionally. This could be due to reasons such as higher costs of raw materials, increased taxes or changing industry trends. However, raising prices without losing customers can be a very challenging task. Here are some tips which will help you raise your prices while maintaining your customers:
See also: How to Compete on Price
1. Give sufficient notice
Price increase is usually not very good news for customers. Your customers will be even more aggravated if you decide to effect price changes with little or no notice. Therefore, to retain your customers’ goodwill, it would be advisable to alert them weeks before the price changes are put in place. This gives customers time to prepare for the impending financial burden. In addition, you should take time to explain the reasons for the change of rates as well as address questions and comments from your customers.
2. Don’t apologize
As you explain your reasons for raising prices, don’t make the mistake of sounding apologetic. This will only make you appear weak in the eyes of your customers and prospects. The key to maintaining the loyalty of customers is to raise prices with confidence. In addition, don’t just blame external circumstances for your decision. Instead, focus on the extra value which your customers will enjoy for a higher price.
3. Emphasize your value
Not all customers make buying decisions solely on the basis of price. There are many who would be willing to buy your product or service due to its perceived value. Therefore, one of the best ways of raising your prices is to remind your customers what they are getting. Mention some of the major benefits your product or service has offered over the years, and then take time to explain how raising the prices will help you offer your customers more value. To convince your customers to pay more, you could consider upgrading your product or including a bonus service.
4. Charge new clients more
If you have loyal clients that have been paying the same price for several years, it might be tricky to begin charging them more. Therefore, to avoid losing such customers to the other businesses, you could consider limiting your higher prices to new customers. This way, you can earn more without risking the strong customer relationships you have built over time. If new customers respond well to the higher prices, you can introduce them gradually to existing clients. Carrying out an 80/20 analysis can help you identify your most lucrative customers. You can charge the same rates for your top 20% customers, and then increase prices for the other 80%.
5. Offer options
One of the best ways of making your price increase more palatable is to offer options. For instance, if you want to raise the price of your service from $15.50 to $23.99, you could consider offering a version with fewer features for the current $15.50. This way, customers who cannot afford to pay the new price can still continue using your service, with the option of upgrading to the premium service later.
What strategies have you used to raise the prices of your products or services? Share in the comments section below.