How do you raise your prices without upsetting your loyal customers?
Pricing is one of the hardest tasks to undertake as a business owner. How do I set prices that attract the right clients and give me the return I deserve? Generally when small business owners start out they undervalue themselves and consequently undercharge their clients.
I am often quoted as saying - "start as you intend to finish" and that is especially true of your #position in the market - how you are perceived influences the prices you can afford to charge.
But sometimes we are tempted to enter the market at a lower price with the expectation to increase our prices as our reputation grows and our brand builds. But when you consider that a brand is the promise between what the business delivers and what the customer expects - dramatic pricing changes can diminish the trust.
However, moderate price increases are necessary and expected. We all know that prices go up on everything we buy so it is natural for the our price of our goods and services to go up as well. Customers are never thrilled by a price increase but they can be accepting if the news is delivered in a fair and reasonable way.
Competing with your competitors on price is a short term and dangerous strategy. If you have great products and services price is not a factor for your loyal customers.
There are a number of strategies you can use to ease customers into the change:
- Let them know first
Your loyal customers should be given advance notice of a price change. Post the price change and dates through all of your marketing platforms. You could use the opportunity as marketing tool by encouraging last chance sales before prices go up.
Remind customers how long your prices have been the same. e.g “ after years of bringing you the best ‘x’ to continue to offer you the best we have to increase our prices.” Reinforce your point of difference and the value you create, the problem you solve.
- Combine a price Increase with new pricing options
Try creating new value deals, subscriptions or cross-selling with related services. Offer add-on services as part of a bundled price.
If you also operate B2B it is also the right time to renegotiate contracts. Build in the price increases. It’s a good idea to market this as an annual event so there are no surprises.
- Identify New Markets
You could offer your products or services to a more affluent customer base that will easily accept higher prices.
- AcceptanceBe confident with your decision - you know it is necessary for your business to continue / be more profitable. You might lose some customers, but you need to know that it is ok - if some of your customers go to a ‘cheaper’ competitor - they were never really part of your brand’s ‘tribe’. Use the opportunity to find out just who is.Have you had any challenges when you've raised your prices? Let me know.