How to Raise Prices without Losing Customers
If you've been in business for awhile, eventually you face the reality that at some point in time you will need to raise your prices. Usually external forces are at play - either your suppliers have raised theirs or other costs of doing business have increased. Clearly, this is not the most pleasant aspect of small business ownership, but a reality nonetheless.
So how do you go about raising your prices without risking sales volume and loyal customers? ValPak offers some valuable insights and data points to consider:
Look for the signs.
If you have more work than you can take on, or your cost of doing business is rising, it may be time to increase your prices. Another sign that it may be time for an increase is if you haven't raised rates in over two years. Are your competitors raising their prices? That may also be an indication that it's time for an increase.
Also consider if it's time to level-up your product or service in order to stay competitive in your market. Increasing your pricing can help your bottomline and profitability, for sure. But it also can help distinguish your product or service or provide an opportunity to improve the quality or experience you offer to your customers.
Before you raise your prices, explore these tips and data points from Valpak:
When in doubt, test it out.
Raising your prices doesn’t have to be a risky move. According to Valpak, "Customers are often willing to pay a little more for something if it’s solving a problem or need that they have." Increased profitability can be obtained by a small shift instead of a giant jump. Valpak's marketing team claims that, "A change as small as a 1% price improvement can result in an 11.1% increase in operating profit. "
But the best way to avoid a possible backlash is to run a survey first - via either email, in-store at check-out, or at close-of-sale. Constant Contact offers an easy-to-use email survey solution as part of their Email Plus plan. There's always Survey Monkey as well. When conducting your pricing survey, ask additional questions besides just finding out if your customers will stomach a price increase. Ask about what you can do to provide more value, a better product, or improve service.
Take the survey results to heart and seize the opportunity to elevate your customer’s buying experience or offer better value and support. Then it's sure to be a positive move for both your small business and your customers.