Worried that increasing your prices will send your customers running – and scare off new ones?
You’re not alone.
Many business owners struggle with pricing structures, but ask yourself: do you believe in the value of the service or product you offer your customers?
Of course you do.
You’ve set your prices and established your position in the market. Now what? Carefully considered annual price increases can save lots of headaches in the long run, while reassuring your clients that you are confident in the value of your offering – you are keeping on top of quality!
Why you should raise prices every year
Business costs go up with inflation
Your costs are going up – you know it, and your clients know it! Small, annual ‘in line with inflation’ price increases will spare your clients a larger hike in the future when you realise you are no longer making the margins you need to.
Things change. In order to plan for your business, you need to build in reserves and be ready for any unexpected cost increases. This might include dramatic shifts like energy prices or government legislation that imposes costly process changes. Be ready.
You’re more experienced
Every year of trading gives you another year of experience. You will be offering more value to your clients through the lessons you learned in the previous year – increasing your value to your customers.
Easier and cheaper to raise prices than find new customers
If you need to increase your turnover, your choices are to raise prices or find new clients. The cost of marketing and onboarding a client far outweighs the risk of raising prices for clients who already know your value.
And once you’ve decided to raise your prices, consider how to approach your customers:
Customers will see straight through any flowery disguises or hidden changes to contracts. You’re raising your prices because your service is worth it. Explain WHY you’re raising your prices. Own it. They’ll respect you more.
Link price rises to customer value
Remind them what they are getting from you. That might be highlighting your fantastic customer service or showcasing the quality of your materials. You are charging more to maintain quality – not scrimping on your offer.
Now you’ve established your worth – why sell yourself short?
Why discounting can be dangerous
Discounts can have a valid and valuable place in certain markets, at certain times. But are they right for your business? Consider these points carefully before making decisions you can’t ‘undecide’!
Undermining your own value
By charging less, even temporarily, you are sending several damaging messages at once. You are implying that your usual prices are overinflated, leaving the impression that your goods and services are not the quality and value you have previously stated.
Attracting the wrong customers
Customers who are attracted to discounts are price oriented. They will always seek ‘cheap’ rather than ‘quality’. They are unlikely to stay with you past the ‘discount period’ or to talk to others about your excellent customer service.
You’re stuck with those prices
Once you have lowered your prices, it is very difficult to raise them again. You will either have to ‘tie-in’ reluctant customers, do some serious marketing alongside the price raise or accept that you are going to lose a good percentage of the clients you hooked.
We believe in quality and life-long value in the relationships we have with our clients – so forgive us if these thoughts are a little one-sided! We love working with businesses who prioritise excellent value to their customers – believe in your worth and your clients will too.