Most companies eventually reach a point when it's necessary to increase their prices. Whether it's because you need to hire additional employees or you anticipate higher operating costs, or because market research tells you that you are simply pricing your products too low, it's natural to worry how your customers will receive the change. Here are four price increase strategies you can use to help ensure that you retain your customers when you raise your prices.
Confirm Your Value
Nobody likes having to pay more for anything, but higher prices are a lot easier to swallow when you offer a product or service that has discernible value. Do your customers feel as though they can count on your business for consistently high quality? If you're not sure how satisfied your customers currently are, it may be beneficial to distribute customer satisfaction surveys. This is a great way to start communicating with your customer base.
Price increase strategies do not necessarily have to involve an actual price change on the product. For instance, let's say your company sells office chairs at $199.99 apiece with free shipping included in the price. You can keep your base price at $199.99 and add a $10 delivery fee. This is especially useful, as well as justifiable, when price increases are necessary due to external factors, such as a rise in fuel costs.
Offer Product Bundles
By offering bundles, you can increase the perceived value of the products or services you offer and, in turn, soften the impact of your price increase. Bundling allows your customers to buy multiple products or services together at a lower price. For example, fast food restaurants often offer value meals that include a hamburger, fries and a drink for a reduced price when compared to the total cost of the same items purchased separately. Therefore, although individual prices have increased, the customer perceives greater value when purchasing the items together.
Inform Customers in Advance
Loyal customers may not be too happy about prices going up on their favorite product without any notice. If you can, it's a good idea to warn your customers about an increase 30 days in advance. Choose a medium for the announcement that has historically proven effective for your customer base, whether that's a social media platform, email or direct mail.
These price increase strategies can help you retain your customers when it's time for you to raise your prices, but the most important thing to remember is that people appreciate transparency, especially from smaller businesses. Be upfront with your customers, and they'll likely be more understanding should you need to change your price tags.
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