Customers like signing up with subscription based businesses because they enjoy the consistent price. However, chances are at some point you will need to increase the price. The reasons for a price increase might include:
- You want to earn more revenue.
- Your costs have increased.
- You want to reposition yourself and appeal to a different target audience.
- Demand for your service is too high and you want to encourage fewer subscriptions.
- You have increased your expertness or have a higher brand value.
- You offer more services or products and wish to incorporate their costs into your pricing.
Whatever the reason, you have to inform your subscribers the reason why prices are increasing. Without the right strategy to inform your customers you could lose a significant percentage of your customers. Here are some tips to maximise your customer retention during a price increase.
Tip One: Terms And Conditions
Include in your terms and conditions a clause clearly stating you hold the right to increase the price. This way your clients cannot claim a price increase doesn’t apply to them.
It also allows you not to state a clear reason why you are increasing prices. However, not stating the reason is likely to cause several customers to leave.
Tip Two: Give Plenty Of Notice
Always give your customers plenty of notice of a price increase. This notice should be at least 2 months. This gives plenty of time for your clients to find the funds necessary for the price increase. It also supports the trust between you and your customer.
During this notice inform you customers exactly when the price will increase and how the increase will be collected.
One subscription based business which rarely gives notice of price increases are energy firms. Though they tend to announce some changes in the news, they rarely write to customers informing them of when the price increase will come into effect.
Tip Three: Don’t Give Too Much Notice
A big mistake on the other hand is to give too much notice. Some companies can give up to six months notice of a price increase. This is too much time and it is likely your customers would have forgotten about the increase by the time it comes in effect.
Tip Four: Give A Reason Why You Are Increasing The Price
Customers like to know exactly why you are increasing the price and how it will benefit them. This will increase the acceptance of your price increase amongst your customers. Ensure that this reason is passed onto your customer service team so customers can be told the same thing when they call to discuss the change.
Tip Five: Present The Price Increase Right
Present the price increase as a percentage. This has less impact in the minds of the customer, especially if the percentage is less than 5% or the price increase has a significant monetary value.
Tip Six: Repackage Product Bundles
If your service includes groups of products or services, re-organise them. Each new package should offer slightly more than it did before but be priced higher than its predecessor. This way you can increase the price while providing a better service to your customers. Something they will appreciate.
To support this, if you are offering a physical product and you have old stock left over, offer this at a discounted price until the stock has run out.
There are always going to be times when you need to increase the price of your subscription. By ensuring you have the right method to announce your price increase you can minimise the loss of customers and maintain strong customer relations.