Raise your prices when we might be facing a recession? But for some organizations, it’s just smart business. Or maybe it is necessary business. Cost of goods may be on the rise, or labor might be costing you more.
Whatever the reason, there’s a right way and a wrong way to raise your prices. The truth of the matter is in the life cycle of most businesses, prices need to be raised.
Whether you are a law firm that charges by the hour or a manufacturer who sells widgets – your cost of goods is likely to rise. So, your prices need to as well.
Raising prices can also raise the ire of your clients. Depending on the maturity of your business, your customer base, the percentage of increase you’d like to make – there are several ways to accomplish your goal without losing or upsetting clientele.
The most common way to raise prices is to just do it across the board and then send a sincere letter to your customers like "over the past 10 years, ABC Plumbing has worked hard to hold our prices steady. We’re proud of the fact that we’ll be able to contain our price increase to a very modest 2%…" Common, but not without some potential for push back.
Sometimes it is the most common way because it’s the only way. But, how else might you get the increase you want without incurring the wrath of existing customers?
How about charging extra for special privileges? Access to a customer hot-line that skips the on hold queue or upgrades in shipping or turnaround time. Today, one of the most valuable assets for most people is time. If you can save them time, they often will gladly pay extra.
Another way of looking at your pricing is market segments. A business traveler who needs to be in Pittsburgh on Wednesday and back on Thursday will pay more for a plane ticket than a Grandma planning a visit to her family. You probably have similar segments within your customer base.
No matter how you handle a price increase, one element is critical. Be upfront and demonstrate value. Your clients don’t begrudge you making a profit. They just want to get a value for their dollar. Price increases can be a win/win if you think them through and handle them correctly.
Here’s some heartening news. Some research suggests that people like you better if you’re more expensive!