How to Increase Your Prices without Losing Customers

Raising prices is an essential part of business, but it is not always easy to do. Many people put it off, rightly fearing they might lose customers and revenue. What if that lost revenue cancels out the increase in the margin your business needs? The answer is to increase prices without losing customers.  Some businesses can do this easier than others. Retailers, for example, can gradually put up the prices of their goods in line with their competitors. Restaurants can do the same, plus they can use other strategies, such as changing portion sizes.  In other businesses, particularly in the service industry or where long-term supplier-customer relationships are in place, raising prices is more difficult.

Offer Value, Not Price

It is possible to raise prices, however, when you focus on value rather than price. The value of your offering should be part of your analysis and decision-making process when determining prices. It should also be the focus of all communications with your customers. In other words, always stress the value of your offering. This makes it easier to increase prices when the time comes.

Tips for Increasing Prices

1. Get your timing right

Think about the time of year and the buying cycle of your customers. It can also be beneficial to talk about price increases shortly after you have delivered something above-and-beyond your customer’s expectations. In addition, make sure you plan price increases as far in advance as possible. If it suits your business it is also a good idea to raise prices regularly and incrementally.

2. Be honest

You don’t have to go too much into detail, and you certainly shouldn’t reveal sensitive internal information, but you should explain clearly why you need to raise prices. Don’t, however, apologize, as you are doing nothing wrong.

3. Add something extra

Think about ways you can add extra value to the client if you increase prices. Common examples include more favorable credit terms, faster delivery, or improved customer support.

4. Offer an alternative

You can also consider offering your customers a lower-priced alternative. Make sure the alternative meets the needs of the customer and explain clearly all the differences.

5. Offer discounts

Value over price is a principle that applies to you as much as your customer. In other words, there might be something you value more than getting a slightly better price for your products. Larger orders or faster payments are two examples. You can offer discounts on your new, higher prices if your customers give something you value.

If you have strong relationships with your customers, you focus on value instead of price, and you follow the above tips, you will be able to increase your prices without losing customers.