Business owners often dread raising prices for fear of losing customers. When costs increase and profit margins are slim, however, raising prices may be a means of survival. So how can you do this in a manner that won’t turn your customers away?
Before simply changing the numbers on your sales tags or on your price quotes to customers, approach your price hike with a plan. Several strategies can help make higher prices more palatable to customers:
- Be honest: Telling your customers why prices are going up goes a long way, particularly with regulars. If, for example, prices are higher due partly to the use of more environmentally favorable packaging, you can explain the benefits of such greener packaging. Reports show that nearly 80 percent of consumers say they would be willing to pay more for environmentally sound products and packaging. Customers may not like paying more, but in most cases, once they understand the reasons behind the increase, they will be more accepting of the idea.
- Boost your customer service: The more you can offer your customers, the more value they receive for those extra dollars. This could mean placing a special order, tailoring a service you already offer to meet their needs, or simply carrying boxes to their car. Look for cost-effective measures of personal service you can provide that will bring customers back for more, despite the bigger price tag.
- Promote convenience: Can you deliver a service or product faster than your competitors? Is your Web site easier to navigate? In a fast-paced world, you can justify a price increase by making sure you meet the convenience needs of your customers. For a service-based business that may mean staying open later. A small New York City barber shop, for example, raised its prices but also tacked on evening hours so the 9-to-5 crowd could come in for haircuts after work. Customers didn’t mind paying a couple dollars more to have their hair cut on the way home from the train rather than making a special trip on a Saturday afternoon.
- Pledge reliability: Remind your clientele that you are a reliable business they can trust. Customers want to shop with familiar Web sites and well-known companies that won’t be out of business or unreachable when they need to return an item or ask a question. Many people prefer to go to Amazon.com and pay a few dollars more than a competitive Web site, for example, because Amazon.com has proven its reliability. Play the “trust card” in your marketing strategies so customers know that spending a dollar or two more is worth the assurance they receive in return.
- Put customers first: Add customer birthdays into your database and send an e-card or discount on that day, offer a newsletter, or provide an in-store presentation. Remember, 80 percent of business comes from return customers, so make them feel important.
In the end, you may need to expend a little more time and energy to hang on to customers, but having a strategy that makes higher prices more palatable will be well worth it.