We live in a time of global economic recession, and a lot of businesses are struggling to survive. Therefore, it’s only natural that some of them are looking to change their prices and want more money in return for their product/service.
However, the question is: how to raise prices without losing customers?
Some of your clients might be okay with the increase, acknowledging the global situation. Others, though, might not take the raised prices too well, and choose to stop using your services or products, altogether.
Is your business facing the same dilemma? What if we told you there’s a way to increase prices without losing customers?
Yes, there is. Let’s find out how.
How to Raise Prices Without Losing Customers: 9 Tips
- Financial planning.
- Improve your product/service.
- Apply discounts.
- Offer different package deals.
- Take an honest approach.
- Be prepared to lose some customers.
- Learn from the competition.
- Do not apologize.
- Inform your customers.
1. Financial Planning
Before you decide to apply any price changes, it’s important to do your financial analysis and planning.
Because if you don’t, you could end up having to increase your prices once again in six months, or next year, and that will create a bad experience for your customers. That will most likely result in tons of bad reviews, and many customers leaving your business.
You don’t want to raise prices twice a year, frustrate your customers and make them leave, do you?
Instead, it’s much better to plan for a couple of years ahead – think about all the expenses your business will have – not just your current ones.
2. Improve Your Product/Service
You should always be looking to improve your products or services. This is even more true when the time comes to adjusting your prices accordingly.
Sure, it may be a necessity to ask for more money from your customers, in order to keep your business running, but why not emphasize the quality of your products or services, instead?
Let people know that you plan on improving the quality, adding extra features, and so on. From a psychological point of view, it’s much easier to explain the raise in such a way, as compared to simply stating your prices are going to increase.
3. Apply Discounts
Some clients are on tight budgets, and therefore like everything they pay for to be calculated down to the last penny.
For such customers, you can incorporate special discounts and deals, in order to minimize the impact of the higher costs, and bring down the product to its original price.
The cautious shoppers will take advantage of such deals, however, a lot of your customers will not pay attention. That means you will still make a profit while keeping the other customers.
Basically, you’re increasing prices without losing customers.
4. Offer a New Package Deal
It may be a good time to create a new package deal, in order to compensate for higher prices. If you currently offer two options to your customers, you can include a third one at a lower price.
For example, you have a “Basic” and “Premium” subscription packages. The first is $39, and the second is $69. Now, you’re raising prices, and the second is $89, while the first is $59. What you can do is to create a “Economy” package, which includes the “Basic” features, and some “Premium” ones, offering it for $69, which was the original price of the “Premium”.
This way you offer variety, and allow those users to continue spending the same amount as before.
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5. Take an Honest Approach
Be honest and tell your customers about the real reason behind the price change. It’s obvious to everyone, anyway, so why cover it up and pretend otherwise?
However, avoid being too vague. Simply stating that the global economic situation is the reason for raised prices is not enough.
Be more exact, and state numbers, if possible. Have the prices of supplies increased dramatically? Did you have to raise wages to retain employees? Let people know, and they will understand.
Of course, this does not mean that everyone will keep doing business with you, but it’s a much more “human” approach than trying to lie and avoid direct answers.
6. Be Prepared to Lose Some Customers
It’s inevitable. There’s nothing wrong with accepting the fact that some customers will no longer do business with you. It’s nothing personal, just a matter of money.
Truth be told, the customers you will lose are those that are only looking for a good deal. Since a price change would make them leave your business, they are obviously not that drawn to the benefits and quality service of your organization.
On the other hand, you might attract new customers that have no issue with paying a higher price for a quality product or service. In the end, it’s nothing to be too concerned about.
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7. Learn from the Competition
You don’t need to reinvent the wheel. Watch and learn from your competitors, and how they’ve handled increasing the price of a product.
Stay away from the bad practices, and gain insights from the good ones. Also, it’s important to note whether companies in your industry have actually raised prices recently.
If you’re the only one that’s doing it, you should also make sure that you are offering great added value to your product/service, as well.
8. Do Not Apologize
You might be tempted to offer your apologies to customers for raising your prices. Don’t. It’s a mistake. If you do take that route, you could appear as nervous and uncertain in the eyes of clients, and they might feel invited to negotiate.
It’s much better to be straightforward and honest. Explain why you need to raise prices, and emphasize on the benefits of your products/services.
9. Inform Your Customers
No one likes unpleasant surprises, especially ones involving finances. There’s a good chance your customers will be irritated to suddenly find out they have to pay more for the product or service they’ve been using.
So, how to raise prices on clients in this case?
Simple. Send all your existing customers an email a few weeks before the price change. Let them know about the change, and again, focus on the benefits you offer, instead of being apologetic.
There you have it. Some proven best tips on how to raise prices without losing customers. Of course, it’s never an easy, nor fun situation to be in, but hey, it happens.
Just accept that you need to do what you need to do. Prepare your customers accordingly, and focus on the benefits that your business offers.