5 Tips For Increasing Your Prices
Pricing. It’s got to be one of the most tricky things to get right in business, hasn’t it? And when we manage it, and start to make sales, the last thing we want to think about is then increasing our prices (not least because we don’t want to lose customers or clients).
However, as costs increase each year, so should your prices. So how can you do this effectively, efficiently, and with the least amount of disruption to your business?
- The first thing to accept is that you may well lose customers/clients here and there when you put up your prices. However, you can’t live on fresh air and goodwill, so at some point you will need to address your pricing structure and increase appropriately. The key is to be prepared for some losses, perhaps identify who might be a casualty of a price increase (who complains about paying what you currently charge, for instance) and then plan accordingly.
- Make sure that you give clients plenty of notice. Don’t leave it till the last minute, or continuously delay giving the news because you feel uncomfortable about telling them. Tell your clientele that a price rise is happening well in advance. Put yourself in their shoes – you’d want to know as soon as possible if one of your suppliers was increasing their prices, wouldn’t you?
- Make sure you can legally raise your prices! If you have contracts with your clients, ensure that you stick to the terms and conditions you’ve agreed to; don’t just go hiking prices without checking your contracts first. If you’ve agreed a price for a fixed term, unless your contract specifically states you can, you won’t be able to then increase prices part way through.
- Don’t justify it. You don’t need to apologise for raising your prices, and don’t back down because you’re feeling guilty. It’s business, not personal; you need to earn what you’re worth – as well as not wake up at 3am every day worrying about paying the bills – so charge a price that’s reflective of that. I’ve been on the sharp end of someone who’s been uncomfortable with having to impose a price rise; ironically, I had no problem with it (they were brilliant at their job) but they felt so awful about telling me that I ended up feeling as uncomfortable about it as they did! Clients really do understand; they’ll have increased their prices too at some point, don’t forget.
- A way of offsetting the pain for clients, if you really are nervous about it, is to advise them in advance that you’re going to put prices up – and then give them a special one-off, not to be repeated, offer. Perhaps sell X months of your services at the current price if they pay now (if it goes over into the new pricing year), or a bulk purchase of product at a slightly discounted rate (but higher than you charge currently). Or perhaps a freebie if they book at your new rate for X amount of time (make sure that the freebie doesn’t leave you out of pocket overall). Don’t do this for everyone, it then just makes it seem as though you’re feeling guilty (I refer you back to point 4); save it for those that you feel will appreciate it most or are most crucial to your business right now.
Raising prices is a natural part of running a business, it has to happen in order for your business to grow. Embrace it, see the positives, deal with the potential negatives, and concentrate on offering the best possible customer service you can. When clients feel valued, and enjoy working with you, they’re much more likely to accept a price rise and not to move to a competitor than they would otherwise.