Raising prices will never generate a good response from your customers, but you can limit the negative sentiment by taking extra measures.
What’s more, raising prices is inevitable that any growing business needs to take. How else can you expect to cope with the ever-increasing prices of labor and materials?
If your business has so far kept price increases at bay because of a fear of losing customers, it’s time to finally take that risk. Obviously, it will be unwelcome news for your customers. But if you’re careful about it, they’ll accept it in a better way.
1. Timing matters
You can’t just shock your customers with a price increase hours before it goes into effect. Give ample time before raising dues for members so the news doesn’t come as a shock. So, send out notifications about a coming price increase way before it goes into effect.
The best businesses send out price increase notices months in advance, and go out of their way to prove the value of the services/products they provide in the months preceding the price increase.
If your business can prove that it’s worth the price, even with the increase, you’ll have a lesser chance to lose customers.
2. Throw in a freebie
Your customers will have an easier time accepting the increased prices if they’re getting something extra in return for the extra cash they’ll be dishing out. Make an informed decision about something that your customers will like, but won’t cost your business much.
Of course, it goes without saying that the perceived value of the freebie you include should be high. For a SaaS company for example, it could be a digital download of some sort, or a temporary upgrade to more premium features.
3. Reduce sizes
Restaurants are known to reduce serving sizes on their food items in a bid to increase net profits. However, you have to be very careful about this strategy as it can very well backfire if customers start to notice the reduced size.
If you know your customers are accustomed to a certain serving size, be sure to approach this strategy very carefully. If you absolutely can’t reduce sizes while keeping prices the same, simply offer the same food items at reduced sizes but with proportionately higher prices.
So instead of selling a $15 1-pound cake, sell a half-pound cake for $9.
4. Introduce temporary fees
Service providers and utility companies do this all the time. Instead of raising the prices of their core services, they simply slapping additional fees on top of the main bill. These fees can be explained to customers, as a temporary measure to stay profitable and in business.
Once your company has passed it’s crunch time, you can remove the fees.
5. Improve products or services
Customers are much more willing to accept a price increase if it is accompanied by a dramatic and noticeable improvement in the product or services they receive. Internet service providers for example, might increase download limits or the actual speed of the internet. This is all done of course, by keeping profits on top of any other consideration.
6. Offer discounts
The biggest fear of any business when increasing prices is that they’ll lose the most budget-conscious customers. And this is true, since the budget-conscious customer mostly cares about the price.
To appease these customers, offer occasional discounts that undercut new prices, or at least bring them back to original levels.
7. Offer product and service bundles
Offering products or services in bundle offers is a great way to mask price increases. When customers see individual prices increased, but at the same time they can get a bundle deal that brings down the cost (while allowing you to sell more products and services), they’ll instantly grab the bundle offer.
8. Don’t be sneaky
It is quite normal and to some extent, accepted from restaurant owners to increase prices without any notice. A business like a digital agency on the other hand, must take its customers into confidence on how and when the price increase will take place.
They must be explained how it will affect the budget, and if some services will need to be scaled back to keep to the original budget. This time is also a great opportunity to offer customers services for the next year or half at the old pricing, if they pay upfront.
9. Stay firm
If your notice isn’t confidence in its language, or if your customers feel that you’re nervous about the price increase, they’ll often use this to leverage negotiations. So try to keep the language in your notice confidence and firm, without being aggressive. It’s a tough act to balance, but certainly not impossible.
You can soothe customers by talking about the benefits or why the price increase is necessary. Try to humanize the situation, and you’ll see a much better response.
10. You can’t have your cake and eat it, too
There’s no way of saying it better, but you will lose customers as a result of the price increase. But do you really want to keep customers that don’t value your services or products enough that they aren’t willing to swallow one price increase?
Sure, you will lose these customers but in the long run, you’ll also gain customers who accept your products or services at the new prices. If you don’t have another impending price increase, these customers will stay with you since they’ve already accepted your new pricing.
Increasing prices is part and parcel of every business, even though it’s a very difficult maneuver to make without losing customers. Do it the right way and you’ll see an increase in overall profits, even if you lose a few customers in the process.