How To Increase Prices Without Losing Customers

June 16, 2015, 9:36 am Kochie's Business Builders Kochie's Business Builders

Here's how to raise prices without alienating customers.

How To Increase Prices Without Losing Customers

As we grapple with rising wages, increasing energy costs and tough trading conditions, a lot of businesses will be looking at ways to increase or even just maintain product margins.

Inevitably for most, this means increasing prices. As we all know price increases are very rarely well received, even by those that know costs are on the rise. Therefore it’s very important to take a tactical approach to announcing any price changes because, in case you weren’t aware, there are good ways to deliver bad news to customers.

Just look at Gelato Messina, who recently announced their first ‘proper’ price increase on their Facebook page.

The famous ice-cream business took an industry survey of 20 other ice cream stores and compared prices, showing customers that their new prices were still going to be below industry averages.

The comparison, coupled with honesty and plenty of notice, means the blow to customers was softened. “Sorry, we know it sucks and we actually feel a little bit nervous about it, but the time has well and truly come. We’ve been talking about it for about six months but we’ve been kicking the can down the road as they say,” Gelato Messina say in its Facebook post.

“It’s really quite unpleasant putting up prices. We feel uneasy just thinking about it. However on the upside, we’re reasonably confident we make some of the best gelato in the world.”

So, here are three of the best tactics to avoid sending your regulars reeling when product prices are on the rise.

1. Give Warning

Give your customers forewarning about the coming increase. This gives customers a chance to purchase more now before new prices come into effect. They feel like they’re getting a deal this way.

Once the new price comes in they will have prepared themselves for it and there’ll be minimal resistance to the idea.

2. Favour Your Favourites

Offer discounts to frequent customers and a ‘normal’ price to occasional patrons. This way you cover the price hike without hitting the hip of your core customers. But no need to roll out rewards cards, you know who your key customers are.

3. Improve Your Offer

Look at where you can bundle products, redesign packaging or add service features to improve the value proposition. If you can create the perception that a product has been improved, whether it has or not, customers won’t mind paying more for it.

These are three simple but important tactics for an agreeable price increase in any operation. So if you’re looking at improving profitability via prices get out there and give warning, favour your favourites and improve your offer. It will make the process as painless as it can be.

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