Raising prices is delicate business, but from time to time, it has to be done if your business is going to continue to grow and thrive. Starting out in any business, smart entrepreneurs do their research and set the best prices they can, but even the smartest may find, as they learn from more experience, that they set those first prices too low. More likely, the quality of your goods and services will grow right alongside your business, and will deserve higher prices. Over time, the costs of doing business are also likely to rise. Here are two key tips to help you raise your prices, in any business, without losing your customers:
Keep a pricing strategy and a regular price review schedule.
The U.S. Small Business Administration’s post, “How to Raise Your Prices or Rates Without Losing Customers” offers a tip that helps you explain price changes to your customers, and that also makes good business sense. Create a pricing strategy for your business, and stick with it, using it to re-evaluate your prices on a regular schedule. Depending on the structure of your business and the nature of your industry, schedule a price review on a monthly, quarterly, or annual basis.
When you review, use a clear, thought-out pricing strategy that reflects the costs of doing business and the ups and downs of your field. With this structure in place, you’ll know whether you’re charging enough and where you can afford to negotiate. When the time comes to raise prices, you’ll also be able to clearly explain to your customers why their rates are going up.
Don’t place blame.
This post from Entrepreneur magazine makes an important point in its title: “How to Raise Your Prices Without Playing the Blame Game.” If you’re worried about how your clients or customers will react to a price increase, it’s tempting to explain that you’re raising prices because of inflation, because your vendors have increased their prices, or because some other outside factor is to blame. This weakens your position, and misses an opportunity to emphasize the value you bring to your customers.
When explaining a price increase to existing customers, emphasize the value you bring to them. Take this time to explain existing features or services you may not have made them fully aware of before. Remember, too, to use your fair, well-thought-out pricing strategy to honestly explain the change and answer any questions. And finally, keep in mind that only your existing clients need to have any explanation of the new prices. For new customers, your new price is simply the price they’ll agree to pay when they learn about the value your business offers and they decide to do business with you.
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