If you want to stay in business then price raises at the right time are inevitable. My personal experience has been that in a small venture, you’re always biting your nails about whether it will spook your customers. It’s not always as difficult as it sounds and rather than damaging your customer relations, it may boost your sales.
A business that grows is a business that needs to adjust to inflation or upgrade/improve its products at regular intervals. To do that you need to raise your prices and communicate appropriately with your customers so that you don’t put them off. Communicating a price increase is a sensitive affair and if you don’t do it properly you may lose your clientele.
But first, you need to be sure about why a price increase is required. The reasons could be:
• An increase in the cost of doing business
• To cover the costs of a higher quality product
• To match the price with the value your product or service is giving
• To generate more revenue to grow the business
• To align prices with the competition
I’ve always been in a fix when I want to raise prices without losing customers. But I’ve been studying what others do and learning from people who have been in business for a long time. As a result, I’ve collected a few sure-shot rules on how to deliver the news to my customers.
10 best ways to raise prices without losing customers
1. Show them what value you have been giving them.
A good way to start is by talking (could be an email or a phone call, or a face to face) them about the value your product has been giving them. Especially if they’ve been your customer for a while it’s a great idea to start by reminding them of what a great relationship you have with them and the value your services have given them. Use it to convince them that to continue providing the quality and level of service that you are giving; a price rise is necessary. This could be some added value that you provide for which you may not be charging extra or things that you can highlight to justify the rise in price. If you have consistently delivered more than what was expected over a period of time, then your customer shouldn’t hesitate to continue with you.
2. Point out what added value you will be providing
If you’re increasing prices, most customers will look for what more they’re going to get out of the deal if they pay more. Think of how you can better your product or what you can add as an extra. Examples like free packaging or free delivery to some places could be options. Any additional benefits or extra services which you may already be providing but not highlighting could be mentioned. Adding new features is another way of increasing the perceived value to the customer.
3. Tell them why
You cannot increase your prices without explaining why. Your reasons could be any of those we talked about above or something else. You may want to focus more on quality or your costs may have gone up. Your customers need to know where the extra funds are going to be used. You may not share all the reasons for the price increase but identifying a list will help you stay confident about doing it especially when you are interacting with your clients.
4. Don’t spring a surprise
Give your clients advance notice before raising your rates. Email, call or announce on social media so that they have time to expect the price rise you have planned. Give them the opportunity and time to decide how much business they want to do with you at the existing rates before the prices go up. To catch them off-guard would be suicidal. Plan the increase, plan the announcement and then let your customers know how it’s going to happen. One way to soften the blow is to announce a rise in rates just after a successful transaction. Thank the customer for his/her appreciation and let them know that the next deal will be at a higher price. If you’ve proved your worth it’s always easier for the customer to accept your hike. It actually helps to soothe the shock.
5. Cushion the blow with discounts
There are some customers you just don’t want to lose. Introduce customer loyalty points, deals, discounts or coupons for loyal customers who have kept you afloat from the beginning. This will help you avoid old customers leaving you for the competition. Your discounts and loyalty points will make sure that old customers are still paying old prices or are buying at a very small hike. This will ensure that they stay loyal and are discouraged to switch suppliers.
Have you read how to revive a dead business to be profitable?
6. Go after a bigger market
There may still be some clients who will leave once the price hike comes into force. Before that happens, you need to start looking for a different market to keep growing. Stagnant prices represent a stagnant business and the only way to raise your rates and keep growing is by continuously exploring new markets. You can consider markets outside your locality or even abroad. Don’t confine yourself to areas you are comfortable with, you never know what could happen if you step out of your comfort zone. This is one of the best ways to offset lost customers.
7. Expect an uproar
Well if you think your customers are just going to take your price rise lying down, then think again. You need to be prepared to respond to quality issues and other grievances about your product as soon as you announce. The best way to deal with it is to acknowledge what they are saying and try to find a solution for them. At no point should you back down once you’ve made the announcement. Don’t get pushed around. Give them excellent customer service but stick to the raise come what may.
8. Stay in touch
Keeping the conversation open is a great way to raise prices without losing customers. You can’t just announce a price rise and then let your customer think about what they will do alone. Stay in touch over email, phone, social media, etc. and keep talking to them. Acknowledge their protests or complaints politely, try to address their problems satisfactorily and be transparent about the reasons for increasing prices, but stay firm. Give details of how the price rise will be implemented and enough information for them to understand how it will impact them. This will blunt the initial reaction and will help to bring them around to your perspective.
9. Stay confident and don’t apologize
You need to be compensated for your costs and time. Never apologize for a price hike. You are risking the survival of your business if you don’t raise your rates. Take a hard look at all the work you’re doing, the quality of your services/product and the effort that goes into delivering it right. You and the company deserve this price increase. Honestly consider the value your product is giving your customer. Don’t you think it’s high time the company starts growing? Hiking prices is the natural progression of any business that wants to grow and though you should justify it, there is no reason to be apologetic or hesitant. Don’t negotiate if you’re delivering value, customers who appreciate will stay.
10. Raise prices for the right reasons
If profitability is your only objective then it might not be a good idea to raise your prices. A better profit margin can’t be the only reason for a price hike and if your customers catch on to it, you may start losing them in droves. Like I said in point no. 3, you need to have a very good reason and an even better explanation of why your prices are increasing. You must maintain the trust and confidence you built with your customers if you want them to stick with you even after you have hiked your price.
Finally, if you are valuable to your customers and they value your product and service, there is a better chance that they won’t go to the trouble of seeking a competitor. Customers don’t like taking risks and if you’ve established yourself in terms of quality and reliability then I don’t think you need to worry much.
Price increases are inevitable for running a business and so unavoidable. If they are strategically planned and implemented, they serve to increase potential. They can create uncertain situations at times but if you communicate them well, your customers will be happy to accept. Any reasonable customer doesn’t expect prices to remain stagnant forever. If you’ve won your customers over there is every chance they will stick with you through the price increase.
Do you think you can’t do this alone? Reach out me here and I will provide you with the mentorship your business needs.
All the best, be brave, be strong and things will come to be.
Magbè
Tell me how you’ve been able to raise prices without losing customers or how you handled a price raise as a client in the comment section.
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Customers always look for cheap prices. These are great tips to handle customers and prices!
Thanks for contributing, Haroon.
Nice content keep writing .
Thanks for reading, Ajsy
Sound advice. As a small business, you need to make sure you’re pricing appropriately and if you’re too cheap you need to adjust. It can be hard though and you’ve given some good tips on making the change without annoying your customers too much.
I couldn’t agree less with you. It’s easier for big brands, but quite difficult for smaller businesses. That’s why I put these tips up
All really great information! I don’t sell anything but totally agree with all of this!
Thanks for reading, Krysten
These are great tips, especially for anyone thinking of opening their own business.
Yes, Sondra. Glad you read the post.
Great tips, I hate it when prices are raised without any warning and from a customer’s point of view, would definitely like to know why the price increase.
Hi Mayuri, I can relate too. That’s why I put up to post to help anyone in the situation. You also know how to approach your service provider if things like these happen again!
Some excellent advice. It’s never easy to raise prices for existing customers but sometimes it needs to be done.
It’s not a child’s play, Angela. But with these tips, one can have that conversation.
This is a great post with some fantastic advice for small business owners!,I’ve had to do this a few times over the years. I started designing websites on a freelance basis in 2006. Back then it was more about getting people a presence on the web. Fast forward to 2012 and clients wanted a whole digital strategy, not just a website, but a social media strategy as well. I increased my prices in 2010, 2014, and 2018.
Kate, it’s nice to read your success story. Raising your love at that point was the best thing to do.
Thank you so much for these tips! I am going to utilize them today!
Hopefully, they work for you, Stephanie. Thanks for reading.
This is a great post, thank you so much. And i agree with you, transparency is the best option when it comes to raising the prices.
Being transparent ensures that your customers or clients know that you have them at heart. Thanks for contributing, Chad
As a customer I am ok with a business raising prices if it’s for the right reasons. I agree with all your tips. Great post!
Good to read that you’re for the growth of entrepreneurs, Alexandria
Great information. It’s always scary raising prices, but you have to do what you gotta do. These are great tips to get through it.
Thanks for reading, Crystal.
Great information. It’s always scary raising prices, but you have to do what you gotta do. These are great tips to get through it without losing respect.
Thanks for reading and contributing, Crystal
I never have a business of my own yet. But this is one of my concern. Like what if I’m not good enough and putting value will disappoint others. But just as you said, if it’s something that I think worth the value, there’s no need to worry but keep going. Because even there are rejections, there are those who will take it.
Thanks for reading, Lala
These are great tips not only to a small businesses but also to a big one. Everything you’ve said are on point and I agree with you that you should give a notice prior to your price increase.
Notice is the only good way to respect your clients or customers.
I agree with all your tips here. It will be very useful for those who need to raise their prices.
Thank you for reading.
If the product is great I would never change vecause if a small increase in price. I think business owners should inform customers in advance or run promos after the price increases for atleast the first week
That’s a helpful one Nelly, to run promos after the increase. I wouldn’t want my customers feeling they are not valued.
I’ve been meaning to do this with existing clients, but it’s not easy. I’ve raised my rates for incoming ones through. So far so good.
I know that feeling. Thinking that the new rates for new customers will cover for old ones and they were there for you. But, sis, if you need to do it, please do. Your clients understand clearly that it is for your business and you’ll provide even more impeccable services.
These are great tips for anyone who owns a business. Sometimes things go up
Most times, things go up but customers and clients see it as ways that business owners cheat them. So, it’s quite tricky.
This is very interesting what you write because you do not talk to your customers about the increase in products and sometimes you do not know how to approach the issue. Great tips!
Thank you, Alexa
I agree with all of this. Communication is the best so tell them why and make sure every penny is worth it.
Sure. Thanks for stopping by.
Very nice tips.. Some businessman really needs these kind of advices. 😀 Thanks for sharing such a great content.
Thanks for stopping by, Nina
Im thingking of starting a new busines and this tips will definitely help me thank u for sharing this
You are welcome, Alexa. Success to you!
These tips actually make sense. I could use some of them asap.
Trust they would for you!
This is great to be reading right now, as I’m just about to launch a line of products!
That’s so good to read! Wishing you success in your business.
Pricing is really the most important part of business. The tips are really practical and useful, I am definitely going to try some of these.
Good to read the post is helpful, Samar