How to raise your prices
As prices continue to rise, you’ve likely noticed that your cost of doing business has increased as well.
With that in mind, you may be considering raising your prices – as you should. After all, the main point of any business is to make money, and you can’t do that if you’re no longer breaking even.
Read on to discover some tips on how to raise your prices, and how to tell your customers.
Accept that you have to do it
It’s a daunting task to consider raising your prices, as the danger of losing customers will be front of mind.
But the bottom line is this: you cannot deliver quality service if you’re not charging enough. It’s that simple.
If you’re spinning your wheels trying to make up the difference, you’ll lose customers in the end anyway. You won’t be able to deliver the great service you’re known for if you’re constantly overworked trying to find profits elsewhere.
Raising your prices is part of doing business. It doesn’t make good financial sense to try to swallow the cost to appease your customers. With that in mind, know that you’re doing the right thing both for yourself and your clients.
Understand what’s costing you more
At least once per year, take a look at what your business costs. Check which products or services are making money, and which aren’t. Then take it a step further and pinpoint the breakeven position for each area.
You will then be able to decide how much more you need to make to be profitable and comfortable. Evaluate all avenues – supplies, staff wages, bills, rent and utilities, training, etc. By doing this regularly, you’ll see which areas cost you more over time. Those that cost you more will likely benefit from a price increase.
Decide your approach
If costs have gone up across the board, a blanket increase would make sense. However, if you find that only some of your services now cost more to operate, it might be a good idea to increase only those prices. Your customers will appreciate only the necessary cost increases being passed on.
Gauge the satisfaction level of your current customers
If you know that your clients are happy and believe they’re getting great service, they’re going to be happy to continue paying for that. They won’t bat an eye when you inform them of your increase.
But, if they’re not currently satisfied, a price increase will be an excellent excuse for them to leave. This isn’t necessarily a bad thing–some of the lost profits from those customers leaving will be made up by the price increase to other customers. And, clients that aren’t happy could become long-term headaches for your company.
Give a lot of warning
Three months before your planned increase, email your client base to let them know of your plans. State the reasons for you’re raising your prices now.
Put emphasis on the fact that this change is necessary to continue delivering the high-quality service that they’re used to. Giving enough notice to your clients so they have time to react and prepare shows you respect them.
Send a personal message to long-time clients, or ones that hold significant accounts. This shows them that you care about their reaction, and gives you a chance to listen to their concerns.
Keep the communication lines clear
Most clients will be fine with your price increase. Some will likely have questions, concerns, or even complaints. Focus on answering their questions.
This isn’t a hard sell – it’s a discussion. Because you’ve done your research, your increase is completely justified. As you take the time to chat with your clients, they will come to understand this. Remember, you aren’t asking their permission to increase your prices. You’re letting them know of the decision to do so.
Communicate your value
Don’t be shy about bringing up what you’ve delivered in the past. By reminding them of the great service you’ve provided already, they’re likely to come around.
It’s a great idea to provide options if they’re still hesitant, but don’t give away more than you can. For example, you could offer to keep their prices the same, but trim the services included for that price. You can find a middle ground that works for both of you – alleviating their cost and your workload.
Remember, if you’re already in regular contact with your clients, the conversation around rising prices will be a lot less awkward.
Once you’ve done your research and informed everyone, go ahead confidently with your price increase. By doing so, you’ll be able to continue providing the excellent service your clients are used to.