How to Raise Your Prices & Keep Your Customers
Raising your prices doesn't mean losing all your customers. Keep your loyal customers happy and get new ones with higher prices. Here's how to do it.
So you’ve been in business for awhile now and it’s come to your attention that you are severely undercharging. You hate having to raise your prices, but you know you need to. It’s time to raise your prices and I can help you do it.
Why should you raise your prices?
Chances are that you do not actually want to raise your prices. You’re afraid that you won’t get any new clients, customers will go somewhere else, and you’ll go out of business. Essentially, you’re not confident that you are worth the new price tag. You are not alone, lots of my clients feel that way. Heck, at times I even feel that way.
Here’s the facts: price increases will help you earn more, cover rising costs, and stay in business to better serve your clients in the long run. All businesses have to raise their prices at some point. Even the Dollar Tree had to raise their price! (And long before they raised their price tag they had been raising their prices under the radar – i.e. selling broom parts for $1 each instead of the whole broom effectively doubling their pricing on that item.)
The good news is that with the right price raising strategy, good marketing, and a little bit of competitive research, your price increase will be successful, resulting in more money, less stress, and high client retention.
Option 1: Just do it
Raise your prices without an explanation. If your price increase is less than 10%, you definitely do not have to give any explanation. If you have a direct-to-consumer product business, this model also makes the most sense. Most of your customers won’t notice or blink an eye at a small price increase. Businesses raise their prices all the time without giving you an explanation. This is a strategy I use with my Etsy shop. I will simply raise my prices whenever my cost goes up or the cost of shipping goes up. Small increases often go unnoticed or are easily justified, so they don’t often result in upset customers.
Option 2: Give a Reason
People don’t like feeling ambushed by out of nowhere price increases, but if you can give a reason to your price increase, it will help customers accept the new pricing. Time of year is a great go-to reason for raising your prices, such as the start of the New Year or the start of your busiest season. Yearly price increases are standard in almost every industry. If you have a client based business, raising your prices a little at the same time every year makes a lot of sense. Other commonly accepted reasons often include: relocation of your physical storefront or warehouse, bringing on additional staff, or a switch in suppliers. Let your customers know why there is an increase in pricing with a brief and honest reason. If you’re a service and project based business, meaning you deliver your services for projects that are approved ahead of time by your client, simply raise your prices for any new project quotes, while keeping previously quoted projects at their former price.
Option 3: Soften the Blow with a Discount or Legacy Pricing
No matter when you raise your prices, you can ease your customers into it by offering a limited time discount off the new price or by offering legacy pricing. Depending on your business model, you might offer your clients the ability to pre-pay for future services at the current price or keep loyal clients at the previous year’s pricing. This is a strategy I use in my coaching business, whenever I raise my prices, I keep my current clients at Legacy Pricing (whatever pricing they have currently). Returning clients and new clients have to pay the new pricing.
Price increases are a natural part of business. Raising your price doesn’t make you the bad guy. If you really feel like any price increase at all will lose you all your customers, there is usually something else at play. Your product or service might not be good enough on its own or you don’t have the right marketing to show off what’s really great about your product or service. The good news is that with the right price raising strategy, good marketing, and a little bit of competitive research, your price increase will be successful, resulting in more money, less stress, and high client retention.
But if you find yourself struggling with the “what ifs” of business, reach out to me and we can figure it out together. I’m a small business coach who helps women who are new to business turn their passion into profit. Your first coaching call with me is completely free, and it’s not a sales pitch. Let me help you sift through the mental clutter and come up with a plan that’ll help you turn your passion into a profitable business.
Article first appeared on NewMorningCoaching.com