It is a simple fact of business life that as you continue to grow and expand – costs rise. This is a natural process that can occur from increases in numbers of employees, increases in wages and suppliers raising their prices to name a few reasons.
At some point you will have to consider whether or not to raise your own prices, yet this can be met with some resistance by your customers.
Some previously loyal customers may leave your business in order to find other service providers. Others could be speaking more to your customer services, taking up valuable employee time. This is probably why many businesses decide to absorb rising costs themselves rather than face the wrath of their customers.
Increasing your prices without upsetting all your customers is possible. However, it requires a significant amount of planning and skill to achieve. Here are some of the methods you can use in order to raise prices and still maintain the majority of your customer base.
1. Surprise And Delight Your Customers
The first trick starts long before you need to increase your prices. If you are able to satisfy the needs of your customers and excel their expectations they are likely to tolerate the odd price rise. On the other hand, should you only just be managing to support them and they are often finding mistakes or problems with your service, they are not going to want to pay more.
This doesn’t mean the odd mistake should prevent you from increasing your prices as long as you are quick at dealing with any problems to the customer’s satisfaction.
You need to ensure you are explaining when and why you are going to raise the price of your services. Customers like to know in advance for their own financial planning and providing a solid reason for the price increase can help them be more understanding.
Giving at least two months warning is probably the best time frame, enough time to plan for the increase yet close enough that it is not forgotten when the new price on the invoice comes in.
Avoid using the excuse of rising costs. This may be a primary reason, yet some businesses using this model come under heavy scrutiny. Some organisations have increased their prices, blamed on higher costs of resources, only weeks before they announce an even larger increase in profits.
As a business you have to make money but customers will not be kind if they see your wealth increase when you’ve told them you’re facing increased pricing.
Instead time your price increases to coincide with other positive changes to the company, perhaps new infrastructure, i.e. new technology being implemented or something else which will benefit your clients. If they see they will gain from the price increase then it will be received more favourably.
3. Add Extra Benefits
Follow the example of Amazon Prime or magazine subscriptions. When they increase the prices they offer customers more features. In Amazon’s case they add more content to their service, giving customers more choice. Magazines will often become larger or decrease the number of advertisements in their publication.
If you can find a way to add features to your service during your price increase you can be sure customers will not mind so much.
4. Do Smaller Amounts More Frequently
Probably one of the biggest mistakes is that companies do not raise their prices soon enough or do it in too big a jump. Customers are going to be more resistant should you increase your price by $5 every two or three years than if you do it $0.50-$0.75 every year.
Many companies do this because they are fearful of losing customers with a price increase. Yet with good communication and an excellent service, a smaller amount is more likely to be overlooked by customers.
5. Restructure / Redesign Your Products
One way of increasing prices is to restructure your products and hide the increase amongst the bigger changes. Sky TV and other satellite TV providers do this frequently by rebranding and renaming their channel bundles.
In these circumstances it can be tough for your clients to see the price increase. Instead they are likely to be studying the new features and structure and comparing it to the old. This may cause some customer service problems, but your agents could be trained to deflect concerns with explaining how the new structure improves the service.
Increasing your prices is a natural part of being in business. Ensure you inform your customers with a good reason and in a timely manner. Also remind them of the benefits of your service at this time and often the majority of your customers will stay with your business.
Do you need recurring billing and subscription management software? Contact one of our experts at firstname.lastname@example.org, call or check out the Fusebill free trial.