If you’re like most business owners, the thought of increasing your prices can be a bit daunting. After all, no one wants to upset their customers or lose business by charging too much. But if you don’t increase your prices periodically, you’ll miss out on potential profits. This blog post will teach you how to increase your prices without losing customers.
How to Increase Your Prices without losing customers
Raising your price is a very sensitive topic and something that many business owners struggle with. Sometimes, you may need to increase the price of your products to keep up with rising supply costs, increase your profit margin, take your business to the next level, or for any other valid reasons.
Many business owners are guilty of raising their prices without researching their market or using a price optimization tool. The results were a loss of customers and a drop in revenue.
While price increases are unavoidable, they don’t have to result in a drop in your sales. Learn how to increase your prices and still make sales by following these tips:
1. The right time
The most suitable time to raise your price is when you are sure that your consumers are happy with what they are getting. Suppose you have plans to hike your rates, be particularly mindful to demonstrate your value a few months before the price hike. Doing so guarantees that any increase is well-accepted by those who count most – your consumers.
2. Add extras
When customers are convinced that they are getting more for what they are paying, they will be more willing to accept a higher price tag.
What extra things could you offer with your product that would only cost a little but would make people perceive it as more valuable?
For example, you might offer gifts or ebooks to your prospects.
3. Reduce sizes
One way restaurants keep prices the same is by slightly reducing serving sizes. This way, customers won’t notice the change. You can do this for almost any retail product, from cosmetics to candles.
If customers do notice the smaller sizes, this tactic could backfire. To avoid this, consider reducing sizes dramatically and charging less proportionately.
4. Play with numbers
If you raise your prices, consider creating multiple package sizes. If you currently offer a 10-pack of toner for $100, you could create a 5-pack for $70 and a 3-pack for $45. This would make the 10 packs look like a better value, even though the price has increased.
5. Add the fees
You can increase the price of a product or service without actually raising it. Many companies do this when the cost of gas or electricity rises.
If you anticipate that your price increase will only be temporary, adding a fee is an excellent way to offset the cost. This way, you can easily remove the fee once the need for it has passed.
6. Add improvements to your products
If you’re thinking about raising your rates, consider making improvements at the same time. Your customers will be less likely to object if they see that you’re offering them something new.
New offerings in your company, such as higher quality fabrics in your clothing line, or a new menu item in your cafe, can justify the price increase.
7. Give a discount to offset the increase in price
When you increase your rates, some clients may leave you. To retain some, increase the price, but occasionally run promotions that bring the rate back down to the original level.
While your more thrifty clients will take advantage of these deals, your more spendthrift clientele may not, so you’ll get lots of people who pay full price, while still keeping your penny-pinchers satisfied.
8. Offer bundle products/services.
Offer bundles or packages of your products or services to help ease the blow of price hikes.
If you own a nail salon and want to raise the price of your services, consider bundling your manicures, pedicures, and foot massages into one discounted service. This will allow you to offer each service at a reduced rate, making it more affordable for your customers.
9. Try targeting a distinct customer base.
To raise your rates, you may need to target a more upscale clientele.
If you’re considering raising your prices, it may be time to target more affluent customers. By doing so, you can offset any potential loss in customers due to the price increase.
10. Increase your prices at regular intervals
If you offer services, it’s expected that your prices will increase over time. This is especially true for businesses like lawn care, cleaning services, or B2B companies. Your customers understand that the cost of doing business goes up, so they won’t be surprised or upset when you raise your rates.
Raise your rates once a year or after a client has been with you for at least a year. This will ensure that your prices align with the current market value.
By offering a monthly rate lower than your standard one, you can entice customers who don’t want to pay as much for your services.
11. Be prepared for a negative reaction
You’ll never be able to make everyone happy, and you’re bound to lose some customers when you raise your rates.
The most common and acceptable reasons for a price hike are higher costs or improved products/services. Be ready to explain your reasoning for the price increase to customers, whether in person or through social media. If you receive backlash from customers, be sure to address their concerns calmly and professionally.
12. Always plan ahead
Before raising your prices, it’s essential to consider your current costs and any cost increases that are likely to happen in the next year or two. This will help you ensure that your prices are still competitive while also covering your costs.
How to Tell Your Customers That You’re Raising Prices
Eventually, you will have to inform your customers that prices will be increasing. You worry that they will react with anger or frustration.
Raising your rates can be scary, but it doesn’t have to be. If you do it right, your customers won’t mind.
Think of how you’d feel if a company you purchased from suddenly increased its prices. What would make that frustrating?
What reasons would you think are okay to charge more?
Here are ways to talk to your customers about price increases:
1. Don’t be rude.
Give your clients as much advance notice as possible.
Provide them with factual information. Don’t be condescending.
Be upfront and honest with them. If you can’t, try talking to them on the phone.
3. Don’t be apologetic.
Sometimes, price increases are unavoidable. There are various reasons why you may have to increase prices, including increased costs, an increase in materials, or inflation.
4. Be flexible when determining your pricing.
If you want to add fees, explore ways to deliver extra benefits or create multiple price points. This will help you provide more value to your customers.
Raise prices on new buyers but leave current customers’ rates the same.
Or, you can lower your prices but make it clear to your prospects that you’ll be raising them in the near future.
Never raise your rates too frequently. Instead, set long-term goals for revenue growth and work towards them gradually.
If you raise your prices and customers don’t complain, it may mean that you’re under-charging. To find the right price point, you must test different price points and gauge customer reactions.
You may lose some customers when you raise prices. Some people may resent the increase and go elsewhere, whether they tell you or not.
No one wants to lose customers, but a price increase can lead to greater profits. By losing some customers who resent the price increase, you can make up for it in increased revenue from those who remain. This is sometimes referred to as “addition by subtraction.”
Keep track of how much your price increase affects your net revenues. Use this information to plan for your next one.
Switch to a Profit Margin Attitude
Many entrepreneurs and small businesses are afraid to raise their rates.
You worry that if you tell customers that you’re recording their calls for quality assurance, they’ll pull their customs from you.
Your business is thriving. You’re getting tons of new work.
So much so that you’ve hired staff. You now use more tools and have more technology.
Referral business is coming in left and right.
You’re right; I do deserve to charge more. If I don’t, I probably won’t make it.
Working long hours can be a choice that entrepreneurs make, but it is not always the best choice. Sometimes working fewer hours can lead to more profit.
Unless your raise your prices and change your mentality, you’ll always be overworked and underpaid.
Increasing your rates is the best way to increase your profit. Clients who pay more have more significant problems and value what you do.
Here we’ll talk about how to reframe your thinking about raising your prices and do it without scaring away your customers.
If you follow the tips on how to increase your prices, you should be able to do it without losing too many customers. Just remember to be honest and upfront about why the price hike is happening and give them ample notice to budget accordingly. And who knows? They may even appreciate your transparency and decide to stick around for the long haul!