Whether you’re setting your prices for the first time or considering a price increase, it can feel daunting. Are you putting the right dollar amount on your value? Will your customers or clients agree with your decision? None of these questions should be taken lightly, because getting your pricing wrong can make or break your business.
Of course, you can always be agile with your pricing—and we recommend that! You can lower and, yep, even raise your prices, depending on your evolving business and the evolving market it’s operating within. In fact, we’re here to say you shouldn’t let fear keep you from raising prices when it’s warranted.
Here are some tips for figuring out whether a price increase is warranted, and how to pull this off when it’s time.
There are several reasons why you may want or need to raise the price of your products or services. Here are five:
It’s a delicate dance, matching perceived value with proposed price. In fact, the success of any successful price-increase strategy will hinge on making sure customers’ perceived value of your products and services aligns with whatever you’re asking them to pay. If it doesn’t, they’ll go somewhere else.
If you plan to increase your prices, we recommend taking the following steps to ensure you’re value matching your price:
➡️Be clear and transparent. Prioritize transparent communication with your customers. Explain any changes, improvements, or additional benefits that justify the price increase. This can foster trust and understanding among your customer base.
➡️Add value to match the price increase. Consider sweetening the pot, so to speak, by adding something great to accompany the price increase. This can make the higher price more palatable, as customers feel they are receiving more value for their money.
➡️Provide testimonials and reviews. Positive feedback from satisfied customers can reinforce the perceived value of your offerings. Share testimonials and reviews that highlight the benefits and positive experiences customers have had with your products or services.
➡️Consider a free trial offer. If it makes sense for your business model, consider offering a trial period at the new price or temporary promotional offers to encourage customers to experience the enhanced value before committing to the higher cost permanently.
Naturally, your customers are going to be sensitive to price increases. Nobody really wants to pay more for what they perceive to be the same, no matter how justifiable the price increase may be. So, even though we do encourage you to raise your prices if you need to, be aware that it’s not going to be an easy pill to swallow for some, especially if clients/customers don’t see any tangible improvements that can justify the change in their minds.
Your job, then, becomes to effectively communicate not only the change but also the reason behind the change. If you’re increasing your prices because it costs you more to run your business than it used to, explain this. If you’ve added team members to your crew, explain how this will improve quality, customer service, etc. If your product or service is better than it used to be or you’ve added a new skill set, highlight the benefits they will gain as a way to justify any associated price adjustments. You may need to tap into your PR mojo to find the best way to frame your reasons for your price increase to help clients and customers understand and accept the higher cost.
Another option to make price adjustments more palatable is to gradually implement the changes by taking a phased approach instead of slapping folks with a major price hike. Gradual incremental increases may be more acceptable to customers and therefore a better strategy. You can also consider grandfathering existing customers in at a certain price point and raising your prices for new customers only.
Only you can decide what makes the most sense for your business and your pricing strategy. That said, we do not recommend that you keep your prices the same forever for fear that you will piss people off. Take a thoughtful approach and you can raise your prices without losing business.
If you’re ready to take action in your next level of business, book a call with us!