How To Increase Your Prices Without Losing Customers

December 2, 2013 5:00 am0 comments

money

Maintain Product And Reputation With Better Communication About Your Pricing

Price increases are an eventuality that simply can’t be avoided in most businesses.

While this can drive a wedge between you and your customers in some instances, that doesn’t always have to be the case. Price changes may be the result of higher costs, forcing you to make these increases just to stay afloat. On the other hand, they may be an opportunity to respond to unexpected demand (perhaps you underestimated exactly how much the market would accept).

Sometimes, as businesses, we’re afraid that customers expect the price to stay the same no matter what. While that is true to some extent, consider just how often the price of a burger at your favorite fast food chain has increased. Did you even notice it? Chances are that it’s been going up pretty steadily for some time. They may have lost some customers over it, but not very many.

To be clear, this is not an attempt to say that the best way to increase prices is through small incremental changes that may or may not be noticed by your consumers.  Far from it; there are some effective strategies for increasing prices without alienating anyone so that even if they aren’t particularly happy about the change, they won’t leave you either.

Clarity Above All

Let your customer know exactly why your prices are going up. Be clear about how your product and service is worth more now than it was before or how certain uncontrollable factors are leading to the increase.

Don’t use vague language or try to make yourself out to be the victim of these circumstances. Be direct and respond quickly to any questions or concerns.

If the price is going to increase because you are changing the product or service, make sure it’s easy for the customer to see that the overall value is still higher than the new price.

Go Into Details

Some businesses are afraid to go into many details for their customers. There are certainly some valid concerns here because you wouldn’t, for example, want to delve into why you were or were not able to secure the necessary commercial financing.

However, the more information you can provide, the more trustworthy you will appear to your customers. Sometimes it isn’t enough to say that the cost of raw materials is going up. That just seems like the fall-back excuse many businesses use. Tell them why the cost of those materials have gone up, and why you can’t switch to a different provider. The “why” is more important than you may think.

Give Plenty of Warning

If your product is going through iterations and experiencing growth in its feature set, a price increase won’t seem too unnatural. In fact, many customers will likely see it coming. But for those who don’t, make sure they have plenty of warning. This is an opportunity to focus on all the updates and new features, and you can begin to set expectations early on to avoid the sudden surprise. This is also a good chance to get some feedback and test the waters to see how the increase will be perceived.

Don’t Rely Solely On the Brand

Some businesses believe their brand image is enough to justify rate or price increases. While this is certainly true in some instances, it may also make you look like the kind of business that thinks far too highly of itself.

If you build a strong enough brand so that people associate you with the highest possible quality, there will be some room for price increases, but don’t expect it to carry you all the way.

Drop New Prices In Slowly

Offer multiple price points to encourage customers to go for the higher-priced items or services on their own. This lets them feel like it was their choice rather than having it forced on them. Be clear about how the higher tiers come with added features and more value.

Stay Calm

No matter how you do it, there will always be some people displeased with the new prices. There isn’t much you can do with them but stay calm.

Don’t get pulled into an argument and don’t be overly defensive. Take the opportunity to engage with your customers and try to understand their concerns—you might just make your formerly angry customers into brand advocates.

 

Price increases may be inevitable, but you don’t have to lose customers over it. Just make sure you know why you’re doing it and—more importantly—that your customers understand that reasoning. No one likes having to pay more than they once did, but it is part of modern business and they understand that some things can’t be avoided. Respect your customers and be clear with them and you will have a lot more success in the long run.

Image: iStockphoto

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