How to increase prices and not lose customers
Sometimes small companies find themselves in such situations when price increases are simply necessary for the business to survive. And then entrepreneurs face a problem: how to raise prices, and not scare customers away? In this case, it is extremely dangerous to make hasty decisions. Price increase should be carried out correctly.
We have collected recommendations from experienced businessmen who will teach you how to properly raise the prices of your goods or services, and not to lose customer loyalty.
Correct price increase
1. Price increases should be gradual.
If you begin to raise prices smoothly, increasing them by only a few percent, customers will either not feel it at all or will not begin to object too much. A sharp increase in prices, say 20%, your regular customers will notice, and they are unlikely to be happy about it. So you risk losing a significant part of the client audience.
Another way that does not hurt the wallets of your customers is to make additional services paid (formerly free) that only some of the customers use. For example, home delivery.
2. Do some research
Before you decide to raise the price of all types of goods or services, experiment with their individual types. Increase the price of one product, and follow the reaction of buyers. If everything is good, go to the next type of product.
For certain types of businesses, you can raise prices separately for each category of customers. For example, to first offer products with a higher price to customers less important to you, and then, taking into account their response, make a decision regarding other buyers or goods that are more valuable to you.
3. Always look a few steps forward.
If you are engaged in the production of something and purchase raw materials for further processing, then the price of it may change unpredictably for you and regardless of your business. Or, for example, if you are engaged in delivery, then gasoline prices will be very important for you, which, again, you cannot influence. Therefore, it is important to work out possible options for your future strategy if the prices for materials that you use increase dramatically or drop.
4. Distribute products by price categories
If you do not consider it appropriate to raise the prices of all your goods (services), then you can do it only for certain types of goods (services). Create a kind of “hierarchy” of goods, building them from lower quality and costly in the production (purchase) to more. Increase prices only for the most elite and exclusive products, and if they are really valuable to customers in quality, they will still buy them, even if they have to pay a little more.
5. Combine your products into “packages” of goods or services.
We often encounter such a phenomenon as a “package of services”, which includes several mandatory payment services at once, even if you actually use only one. Such a move is effective if for customers one single primary service from the “package” costs more than the total cost of all the others.
So, when you insure one object, you are also offered to insure others, the cost of which insurance will be much less than the main object. Beauty salons often combine several procedures into a “package”, choosing from which one and paying only for it, clients cannot. The companies that connect cable television also work according to the same scheme – their customers choose not individual TV channels, but “packages” that contain an already defined set of TV channels.
6. Inform customers about price increases.
In some cases, it is just necessary to inform clients about the upcoming price increase. And do it in advance (at least one month). If you are engaged in a business in which you know your main customers literally in person, then they may simply be considered disrespectful to themselves if the price increase occurs without their knowledge.
Also, if you have such an opportunity, offer your customers to place an order in advance at the old price, and then switch to a new one.
7. Consider seasonality
How to increase prices and not lose customers. If your business is seasonally seasoned, and the demand for goods jumps depending on the season, it will be logical to raise prices before the start of the season and lower them at the end of the season. Typically, these price increases are understandable to consumers and they take it for granted.