How to Raise Your Prices Without Losing Customers
If you're running a small business, there will come a time when you need to raise your prices. Maybe it's because the cost of materials has gone up, or maybe you simply feel that your services are worth more than what you're currently charging. In any case, raising prices can be a tricky proposition. After all, no one wants to lose customers due to a price increase. But with careful planning and execution, you can raise your prices without turning away business. Here's how.
1. How to raise your prices - Give plenty of notice.
When you know you'll be raising your prices, start by giving your customers plenty of notice—at least two weeks, if not more. This way, they won't be caught off guard by the increase and will have time to adjust their budgets accordingly. You can notify them via email, social media, or even a sign in your store or office. Just make sure you're clear about exactly when the new prices will go into effect.
2. How to raise your prices - Explain why the prices are going up.
Once you've announced that prices are increasing, take some time to explain why. Whether it's because of rising costs or simply because you feel your services are now worth more, give your customers a reasonable explanation for the price increase. They'll be more likely to understand and accept the change if they know there's a good reason behind it.
3. How to raise your prices - Offer discounts for early payment.
To sweeten the deal for customers who may be hesitant to pay higher prices, offer a discount for those who pay early—say, 10% off if they pay within two weeks of receiving their invoice. This incentive will encourage them to take action quickly, while still getting them to pay the higher price overall.
4. How to raise your prices - Use tiered pricing strategies.
If you're selling products rather than services, consider using tiered pricing strategies to help ease customers into higher prices slowly.
For example, if you sell software subscriptions, offer different levels of service at different price points—basic features for £5/month, premium features for £10/month, and so on. This way, customers can choose the level of service that fits their budget and needs without feeling like they're being nickel-and-dimed every time they want to use your product.
Raising prices doesn't have to mean losing customers—as long as you do it correctly. By following the tips above, you can increase your prices without driving away business. Just remember to give plenty of notice, explain why the prices are going up, and offer discounts or incentives where possible—and you'll be able to keep your small business thriving for years to come.
You might also want to listen to our podcast episode - Raising Prices with Integrity