Announcing a price increase can be difficult for business owners. This is because there are many fears associated with how customers will react to a sudden increase in prices. Many businesses feel that customers will not be ready or receptive to new price changes, causing sales to plummet. But what do you do when you need to increase your prices and also maintain your customers?
Here are 5 tips to help you navigate announcing a price increase to your customers.
1. Announcing Price Increase Directly
While you may feel reluctant about letting your customers know about a price increase, it eventually has to be done. With that said, one of the easiest and quickest ways to get customers acclimated with a price increase is by announcing the price increase directly.
Customers prefer building relationships with companies that are authentic and transparent. Announcing a price increase may come to a shock to your customers, but they will appreciate your honesty and directness. Even more, taking a direct approach shows that you know how to take initiative and that you care about making customers aware of changes that will affect them.
Imagine that your company is selling a subscription to customers that were originally priced at $5.99 a month but increased to $10.99 a month. This is a dramatic change for customers and if you weren’t clear on the new changes, customers might feel like you weren’t being transparent with them. Without clearly communicating with your customers, you will risk losing your relationships with them.
In this case, it’s best to tear off the band-aid and communicate with your customers directly about the upcoming changes. Increasing your prices may give you a sense of uncertainty but being direct can help move things along in your business.
Idea: Create a pop-up on your website alerting customers that beginning on a specific date, prices will increase. Additionally, it’s a good idea to send customers a formal email letting them know that there will be a price change.
2. Let Customers Know Well in Advance
There’s no better way to ease customers into a price increase than to let them know well in advance. This is especially a great option if you are really concerned about how your customers will react to the price change or if your prices are increasing relatively significantly.
Customers will appreciate you alerting them ahead of time and giving them the opportunity to adjust to the new prices. They may not have been expecting the price increase but it is a great courtesy to prepare them for what’s to come.
Another benefit of letting customers know in advance is that it helps to set their expectations. This way, they aren’t caught off guard. Some customers are not rattled by price increases and are easy to convert. On the other hand, there are some customers who need to process the changes that are about to occur. Letting your customers know early on ensures that you consider all of your customers’ needs and give them a good amount of time to accept these new changes.
Idea: If you want to announce your price increase well in advance, it’s a good idea to let customers know a month ahead of time at a minimum. While not a requirement, you may want to consider offering a one-time use coupon as a token of being a loyal customer that is activated once the new prices are in motion.
3. Remind Customers that Higher Prices Means Better Quality
Increasing prices isn’t always easy for business owners. Most businesses are concerned about how their customers will react to their prices and whether their customers can afford this new increase.
With that said, customers are always willing to pay more if they see the value in it. If you are struggling with announcing your new prices to customers, simply remind them that higher prices mean better quality. You want to reinforce the idea that this new price increase is worth it.
This is a good time to get down to the specifics in terms of what additional value you will be adding for them. Ultimately, you want to let customers visualize what they will be receiving moving forward and show them that what you offer goes beyond a price.
Idea: Before raising your prices, think about what you can give to your customer additionally and ensure you can back it up. Whatever you add should be able to help them as your goal is to make them find value in a price increase.
4. Explain the Reasoning Behind the Prices
A great way to announce a price increase to your customers is by explaining to them why you’re increasing the prices in the first place, and those reasons need to relate back to them in some way. Customers don’t care if you are raising your prices due to inflation, for example. While this is a very common reason why businesses consider raising their prices, customers care more about their experience with your company and how these decisions affect them.
Essentially customers want to know what they are getting out of the deal. Providing them with concrete reasons justifies the increase and it gives customers an opportunity to see how the increase can be beneficial for all. Remember, if your offerings are of great value to them, they are more likely to stick with your company as long as you’re honest.
Idea: If you’re struggling with justifying your price increase, keep how your customers benefit from it in mind. For instance, you can tell them that with a price increase, you are able to take on fewer customers and dedicate more time to current customers, improving the overall quality of your offerings.
5. Ensure the Entire Organization is Aware of the Price Increase
When you make big decisions such as a price increase, it’s important that you and your employees move as a united front. For this reason, your entire organization should be aware of the new prices before announcing it to your customers.
The last thing you want to do is be inconsistent with prices. If a few of your employees aren’t aware of these new changes, they can mistakenly quote the wrong prices to customers. This will only cause confusion and will not help your business maintain trust with customers.
Idea: Have a meeting with your employees to discuss the new price changes. It’s also a good idea to leave employees with a handout that they can refer to as they get acclimated with the new pricing system.
Increasing prices is not an uncommon practice for business owners. As a business grows, demands and markets change, and businesses want to ensure that they maximize their profits. While announcing a price increase to customers isn’t easy, it’s doesn’t necessarily mean that customers aren’t willing to adjust to these new prices. If you’re a business owner, take these 5 tips into consideration to help you announce a price increase to customers.
About The Author: Radu Marin
Radu is a former Pricing Manager at HP and is now actively working in our pricing projects as a Pricing Analyst and contributes to Price Edge marketing efforts when possible.
More posts by Radu Marin