The first thing that may come to mind if you’re considering raising prices is customer retention, i.e., not alienating your loyal customers. Raising rates to take on a new pricing strategy is a hurdle that all large and small business owners face. However, the phrase “you get what you pay for” (perceived value) is true across every industry. While you may not want to upset or steer away your customers, have confidence in your decision because, chances are, they will stick by you if you’re their best option (despite higher prices).
While a price change can be daunting, particularly if you’re a new business doing it for the first time or the only one in your service area doing so, it’s a crucial step to continue growing your company. Review your finances, current rates and product or service against your competitors to see if your company will benefit from a price increase. Some signs that it may be time to raise your prices include:
- You have more work than you can take on.
- Your competitors’ current prices are higher than yours.
- Your cost of business is rising.
- You provide a unique product that no other business offers.
- You’ve never increased your prices, or the last increase was more than a year ago.
Once you know increasing prices is something you must do to ensure your company’s future, consider the benefits it can have on your business and your customers. By increasing your prices, you can:
- Increase your profitability
- Distinguish your product or service as better quality (or premium)
- Improve your service or product
- Grow your customer base or improve the quality of existing customers
Let’s explore 12 ways to raise your prices while keeping potentially price-sensitive customers happy and how businesses have successfully updated their pricing structure.
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A significant price raise doesn’t have to be as daunting of a move as it may sound. Existing and new customers are often willing to pay a little more for something if it’s solving a problem or need that they have. It will give your business added value and the opportunity to elevate the customer experience and offer better support—and it’s a win-win for all involved!
The increase doesn’t have to be drastic either to make an improvement. A change as small as a 1% price hike can result in an 11.1% increase in operating profit. With a plan and structure in place and the right tips to successfully ease your customers through the change, a price increase can benefit your bottom line and overall company value.
Sources: Business Insider | Forbes | McDonald’s | Price Intelligently | SBA.gov
