How you can put your prices up without losing customers

Dee Blick February 18, 2013 Uncategorized 7 Comments

'Let me just consider your price rise for a second ......... '

There comes the day when you realise that your expertise and experience is worth far more than you are currently charging. Or perhaps you’ve absorbed so many increased costs in a bid to remain competitive that your profit margin has diminished to the point where you have to increase your prices to stay in business.

The decision to increase your prices is usually met with anxiety.

How will your existing customers react?

They have become accustomed to paying you a certain amount, have budgeted for your services or products and suddenly they’re faced with paying more.

Here are 4 tried and tested ways you can manage a price increase and hold onto most of your customers.

  • Instead of immediately imposing a price increase on customers, let them know you’ll be increasing your prices a little further down the line so it gives them time to adjust to your news. People rarely respond well to negative news being sprung on them.
  • If possible, don’t charge the full price increase to your existing customers. Let them know that new customers will face the full increase, and tell them what this will be to reassure them that because of their loyalty they’ll still be getting a preferential rate.
  • Let your customers know of the additional things you do, and will continue to do, but don’t charge for. Don’t assume that customers are aware of all of your nice touches.
  • Sniff out your competitors’ charges. If you’re still price competitive after an increase you can be confident that if some clients do talk to competitors, they will most likely stay with you.

Of course, no matter how sensitively you handle the news of your price increase, you may still lose some customers especially those for whom price is everything. Accept this. You can’t please everyone!

Perhaps the best advice I can share with you is to charge a fair price in the first place. If you started your business charging a rock bottom price, although it may have suited you at the time in bringing customers to your door, it doesn’t take long for you to  become resentful that you’re delivering so much for so little – and as a knee jerk consequence you hike your prices, alienating many of your customers, surprised at the suddenness of the increase.

So stand in the shoes of your customers and handle the price increase process with care and sensitivity.

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Comments

  1. David Wike says:
    February 18, 2013 at 12:23 pm

    Good advice Dee. What really causes resentment is when you find that prospective customers are being offered a better deal than you, the existing customer, to lure them on board.

    Maybe it’s a good idea for new businesses to adopt a longer term pricing strategy i.e. start off conservatively and ‘price-walk’ as their reputation grows. By price-walking I mean add a percent or two above inflation each year. Probably more acceptable to the customer than sudeenly attempting to make a big jump in pricing.

    Reply
  2. Alice Chambers says:
    February 18, 2013 at 4:19 pm

    I couldn’t agree with you more, especially as this has recently happened to me and it puts a bad taste in your mouth when 2 seconds before everything was going so well. As usual Dee, brilliantly written, you have summarised and clarified everything that went through my mind!

    Reply
  3. Nicky Kriel says:
    February 20, 2013 at 11:48 am

    I think sometimes we know as customers that we are getting exceptional value for money, but we won’t pay more unless we are asked to. I think being warned that a price increase will be coming and being gently reminded of what competitors are charging will retain most customers who are happy with your service.

    Reply
  4. Andrew McDermott says:
    February 21, 2013 at 3:31 pm

    Great article, Dee.

    As a customer, if a service I used were to increase in cost, the things I would want to know are:

    The reason for the price increase.
    How, inspite of the increase, the service delivers greater value and benefits than competing ones.

    I think most people are fair and if that were to be communicated in a clear and enthusiastic fashion I would likely stay a customer.

    Reply
  5. Baker Goodchild Mailing House says:
    May 23, 2013 at 10:07 am

    Great article – price increases are always tough as it’s something your hands are often tied about but you don’t want to lose custom over.

    We found that with the recent Royal Mail postal charge increases we could use it to our advantage, by being honest with our customer base about what was happening in the industry and explaining how we were working to combat it.

    Honesty worked for us and I think the explanation helped a lot too.

    Reply