How to Raise Your Prices the Right Way

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How to Raise Prices Without Losing Customers or Profitability

Pricing is one of the most difficult aspects of running a small business. charge too much, and you'll price yourself out of the market; charge too little, and you'll struggle to make a profit.

So, how do you find that happy medium?

How do you raise prices in a way that doesn't lose customers but does increase profitability?

Below, we'll give you a few tips on how to accomplish just that.

1. Do Your Research

 
Before you start raising prices, it's important to do your research and understand the current market conditions. Take a look at your competition and see what they're charging for similar products or services. If you're significantly lower than the average, then it may be time to start raising your prices. However, if you're already at or above the average, then you may want to hold off on raises for the time being.


2. Communicate Changes Effectively

 
Once you've decided to raise your prices, it's important to communicate those changes effectively to your customers. The worst thing you can do is spring a price increase on them without any warning; that will only lead to angry customers and lost business. Instead, give your customers plenty of notice—a month or more—so they can adjust their budgets accordingly. And be sure to stress that the price increase is due to factors outside of your control, such as rising costs of materials or labor. That way, customers will be more understanding.

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3. Offer Value-Added Services

 
If you're worried about losing customers when you raise prices, one way to offset that is by offering value-added services. For example, if you own a hair salon, maybe you start offering complimentary coffee or tea while clients wait for their appointment. Or if you own a mechanic shop, maybe you start offering free car washes with every oil change. Something small like this can make a big difference in customer satisfaction—and may even help attract new business.


4. Be Flexible With Payment Plans

 
Finally, be flexible with payment plans—especially if you own a service-based business. If someone can't afford to pay your new rates all at once, offer them the option of spreading payments out over time. That way, they can still take advantage of your services without having to break the bank all at once.


As a small business owner, it's important to find the right balance when it comes to pricing your products or services.

Charge too much, and you could lose customers; charge too little, and you might not be able to make a profit.

By doing your research, communicating effectively with customers, and being flexible with payment plans, you can successfully raise prices without losing business or profitability.

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About the Author

Annette Ferguson 

Owner of Annette & Co. - Chartered Accountants & Certified Profit First Professionals. Helping online service-based entrepreneurs find clarity in their numbers, increase wealth and have more money in their pockets.

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