How to raise your prices without losing customers
Jun 11, 2019
The cost of running a business goes up every year, but when was the last time you increased your prices?
If you’re a business owner or manager you may often have considered increasing your prices, but been put off doing so for fear of losing customers. However, a customer will often be willing to pay a higher price if they feel they are getting value for their money.
A good way to increase your prices can be to bundle products or services together, and then offer the combined bundle at a price that offers value to the customer. One such example would be a mobile phone contract which costs more, but which includes a bundle of unlimited calls and 20GB of data per month. The key is providing value to the customer.
Add value to your offering
A good option is to find a way to differentiate your offering. Perhaps you could offer new online services to your customers, such as an online portal or an app. Maybe you could create faster, more efficient processes so that your customers get a faster, more efficient product or service from your firm compared to the competition. If you offer something that is seen to be the best in its class, and which offers additional benefits to your customers, you may be able to increase your prices.
You can test a higher pricing strategy on new customers. Your existing customers might be resistant to a price increase, but new clients will be unfamiliar with your pricing and may accept the higher price if they feel that you offer more value to them than your competitors.
Communicate your price increases
If you do increase prices for your existing customers, you need to communicate this well and explain clearly why you had to make the decision to increase your prices. Do your market research to make sure that your pricing isn’t completely out of line with competitors. If your business is not significantly different to the nearest competition, but then becomes much more expensive, you may run the risk of losing clients.
Large sudden jumps in your prices will not go down well. Instead, introduce gradual increases such as 5% or 10% per year, depending on the type of business that you run. Everyone knows that the cost of doing business goes up each year. If you reiterate this to your customers, they may be more receptive to small increases.
If you’d like to discuss your pricing strategy and the impact any changes may have on your business then please get in touch with the PT team.