During every business’ life, there will be times when the pricing strategy needs to change. If you are thinking this now, you might be wondering how you can raise prices but avoid annoying your customers. To raise your prices and then lose your customers would serve your business no good.
In contrast, you might need to raise prices to cope with industry demands such as higher costs, new legal requirements or to earn a better personal income.
Here are several ideas for you to consider when thinking of ways to increase your prices.
1. New Customers Only
You might want to only charge new customers the new prices. This is sometimes a good idea if you see many incoming clients and significant customer churn. The trouble is that favouritism can sometimes set in and those on the new pricing strategy are given favourable treatment that can damage your business’ reputation.
Also, new customers might find out about lower charges to other clients and want the same.
2. Time Your Price Rise
If you are thinking of increasing your prices, time the announcement right. Ensure your customers are satisfied with your service and see your value. If they know they are getting their money’s worth, they are more likely to be accepting of your price increase.
3. Add Extras
You might want to consider adding additional services to your offering to increase the value of your services and business at the same time as increasing your price. Remember though, your main objective for increasing prices is to earn more profit, not incur more costs. Ensure what you are adding on is cost-effective.
4. Reduce The Size
This is common in the food industry, and some brands have been criticised for it. However, if you can reduce the size of your product but keep the same price point, you will have effectively raised your prices. Easy, effective but can damage customer relations.
Using the word ‘because’ in your explanation of why you are raising your prices is one way to reduce resistance. An experiment has shown how effective this can be. In the experiment, a woman is in a line at a library copy machine. If she attempts to cut in line, she only has limited success. If she states she needs to cut in because she is short of time, she is successful 94% of the time.
If you don’t give a reason for the price increase, you’ll leave that task to your clients, and they might not be so forgiving about it.
6. Numbers Game
Another tactic is to play a numbers game. If you offer a product of 10 units for £100 and you need to increase the price, you can add different levels (e.g. five units or three units) at different pricing levels to show how good a deal you have at the newer price.
Don’t forget to use the decoy effect to show the value of the new price.
Are you looking to raise prices? Then you need to consider your strategy. If you don’t do it right, you could annoy your customers, and some of them could leave. This might negate the benefits of raising your prices and could damage your business’ growth in the coming 12 months.
Instead be careful with your price rise and have a plan in place that explains why you are making the changes and some clever marketing strategies to prove the value of your deals.
Have you raised your prices? What happened?
Tell us your story in the comments.