Sometimes high volume of sales is not enough to grow your business. Expanding the range may be a solution, but that will also increase your costs. In certain scenarios you will just have to start charging more to get where you need to be in your business. Increasing your prices isn't easy and straightforward. On the contrary, it is a very delicate process that has to be executed with extra care as it can make or break your brand.
When to Increase Your Prices
Timing is of great importance for increasing your prices.
When you have established yourself - Make sure you have enough regular customers who are happy with the quality of your products or services. If they see the benefits of your offers, they are more likely to spend a bit more with you.
At the beginning of a new cycle - A new tax year is a great mark for increasing your prices. It makes is look like a natural step of business growth. The start of the calendar year is also a good call for such a change. Depending on your industry, some seasonal events may make more sense.
After you've added more value - If you've recently made improvements to your products and services or added value to them, it is logical to raise your prices.
When your audience tells you to - This may sound strange to some, but sometimes businesses suffer low sales because their products and services seem too cheap. It happened to one of our clients in the beauty industry. Their products were great, but potential clients kept saying they were expecting to see higher prices. In the consumer's eye often times something that is cheap is considered low quality, so you have to be careful how you manage this. Once our client increased their prices by 20%, the sales skyrocketed!
How to Increase Your Prices
You will probably lose some of your clients, but to be honest, if you do this right, you will only lose those who were not good for the business anyway. Here are some dos and don'ts when you go about increasing your prices.
Dos:
Be open and transparent
Let your customers know in advance (at least a month)
Add a clause in your Terms & Conditions about price change and comply with it
Add incentives to make up for the price difference
Run regular discount offers
Don'ts:
Surprise the customer with a higher price on the invoice/receipt
Be non-compliant with rules, regulations and your own Terms & Conditions
Lie about added quality
Offer nothing extra (even if it is just perceived value)
Shut down comments on your price increase announcement, ignore or be aggressive to negative feedback.
MBC went through this process at the beginning of 2018 and so far everything has been running smoothly. If you need more tips on how to increase your prices or someone to put together the right words about the coming change, contact us. We can certainly help!
