For many companies, raising prices becomes an inevitable reality at some point. In fact, nearly one in five small businesses has raised prices within the past three months, according to a 2013 NFIB survey. Though it's natural to fear that a price increase may send your customers looking elsewhere, chances are they will stick by you if they continue to feel you are the best resource for their needs.
These four tips can help you raise prices and keep your customers happy:
1. Think long-term
Try to set prices that you can live with as long as possible, keeping in mind your production costs, operating expenses, wages and other factors. Your customers may be more accepting of a one-time increase they can plan around rather than smaller, more frequent ones. If you haven't already, research what your competitors charge so you can gauge how your prices align with the rest of your field. If yours are significantly lower, it may be a sign that an increase is overdue. If they're significantly higher, it may be worth exploring how you can gain efficiencies to lower your costs.
2. Emphasize value
Many customers are willing to pay more for certain features, such as high quality, convenience or long-term cost savings. Be prepared to demonstrate how your offerings can deliver this value. For example, a machine parts manufacturer might show how its parts can help customers speed up production and become more profitable, while a consulting firm might provide case studies explaining how it has helped businesses streamline their processes to reduce expenses over time.
3. Break out fees
Charging separately for products and services that were formerly included in a price could help you earn a higher profit while keeping customers loyal. For example, a tech company that charges $199 for virus and spyware removal at customers' offices might break out a separate fee for travel. The company could keep the price for the service itself at $199, but charge $25 to visit a customer's site. Keeping the base cost of the service below the $200 mark might help prevent losing sales.
4. Provide advance notice
Give your customers time to accommodate the price increase into their budgets. If you sell a product, customers may appreciate the chance to stock up before the new pricing takes effect. Explain the reason for the increase — for example, higher production costs or fuel prices. Your honesty can help convey that you value their business and might even improve customer loyalty.