How to Increase Prices in Your Business – Part 2 - It's All SAVVY

How to Increase Prices in Your Business – Part 2

Should different customers pay different amounts?
How much a service is worth to a client actually depends on that person’s individual situation. People place different levels of importance on different aspects of a product or service. How to increase prices in your business can be tricky.

Some may value luxury, exceptional customer service and feeling special far more than the actual product or service itself and will pay more for that.

Others may value ethics and the environmental impact of a product or service and will again be prepared to pay more for those things they value. Some clients want simplicity, speed and utility and the price strategy must reflect that difference.

Try tailoring your services to the needs of your clients
Your price strategy can include options that tailor your service to the needs of the client. This allows you to target a much wider client base. For example you can offer options and add ons so people can prioritise what’s important to them.

The alternative is to target a very specific type of client, one who values particular things that sit well with your business and then you can charge more for the service you offer to that client as you meet their specific needs and you both value the same thing.

Both McDonalds and Michelin Starred restaurants serve food, both meet the same “hunger” need of the client. What’s important to a client at the time of buying and the value placed on the whole experience is entirely different and the prices reflect that.

Who is your ideal client?
The key is to decide on who your ideal client is. Then identify what that type of client values from your service. Make sure your marketing is talking to them and pricing structure works with what they value.

In the end price is only too much if the client themselves feel it’s not value for money. In order to make sure you offer value for money you have to understand what the client wants.

A client buying a McDonalds will feel it’s expensive if it takes half an hour to come as at that time they value speed. that same client might spend 10 times the cost of the burger and happily wait an hour if they get to experience a top restaurant with a celebrity chef.

Why do we worry about an increase in prices?
When consumers start to feel they are being overcharged, it can lead to negative emotions. Emotions are not always rational, but customers will usually react by thinking that your product is either too expensive or that you are trying to take advantage of them. Neither is good for business.

Remember though that customers don’t buy on price alone and one of the key things I learnt from many years in sales is that if someone asks or complains about price then they are not yet sold on the true value and benefits of your product or service. An increase in prices won’t scare away a client who sees the value of a service.

When Is The Best Time To Raise My Prices?
If you’re thinking about raising your prices, you probably have questions about how best to do it. Should I increase prices all at once or gradually? Will customers notice if I raise prices? What happens if I wait too long or if my competitors start offering lower prices?

The key things to consider are how best to minimise the concern of clients and you can do this by helping your customers to become accustomed to regular price changes. An annual price increase for example becomes normal and expected and is not met with shock or surprise.

Timing it at a time when your particular service is in high demand is also helpful. If you are crazy busy and you and in high demand at Xmas, then annual price increases in December, at a time when the demand exceeds supply will work in your favour!

Big Pricing Changes Vs. Small Increments
Setting higher prices isn’t always easy, but it is one of the best ways you can improve your business. Not only do higher prices give you greater financial stability, they also give you better control over your expenses. Decide on the amount you want to charge and then the key is to make it a regular update and stick to it! Annual increase of prices seems to work well for many businesses.

Will I lose Customers?
Probably, yes. However if you have successfully marketed your services, if your clients understand the value of what you offer, most will understand why you are worth it. Working all year round on making sure your client base feels invested and connected with your business breeds loyalty. That loyalty will mean few will leave due to a price increase.

If they do go, you have to balance that the increase in revenue for the majority that stay will probably far outweigh the costs of those that leave.

Those that leave, by definition, don’t value your product or service specifically. Don’t take that to heart. The business USP’s are not aligned with what they in particular value and so the price increase isn’t worth it to them. Everybody values different things so that’s OK too. They’ll find a business more aligned to their needs and you will attract someone else more aligned to yours.

How should I notify customers of increased prices
Notifying customers of pricing changes, as well as what those changes mean for them, is an important step.

Here are a few ways you can do it:

1) Email everyone on your list via Savvy’s Send – to – all messaging, with a brief but thorough explanation of why you’re raising prices and how much they should expect to pay going forward.

2) Post on social media a link to a page that gives all relevant details.

3) Pop a notice up in your store or office for regular clients to see.

But no matter how you decide to let customers know about your change, it’s important to do so with tact and consideration. Some customers will be upset if their favourite products and services become more expensive, but the others will understand that prices must go up from time-to-time.

So the key things to take away are –

1) Identify your own hopes and unique selling points for your business,

2) Decide who your perfect customers are,

3) Make sure all your marketing is ALWAYS bigging up your business and talking just to those key people.

4)Make social media posts and newsletters totally inline with making sure those target clients understand you and how your business is totally awesome for them and deliver exactly what they want.

5) Make your price increases regular and be sure to keep up with your costs

6) Train your regular customers to expect regular price increases.

7) Communication is key, be tactful and considerate, but at the same time professional and firm.

This is your business and charge your worth!!

Click Here to book a zoom call with one a of the Savvy team to discuss how to increase your prices