How to Raise Your Prices Without Losing Customers
According to the Bureau of Labor Statistics, inflation is at a 13-year high (5.4%) as supply chains are crippled by shortages of raw materials. This is pushing companies to raise their prices, but the ability to pass on a price increase is highly variable based on the industry and nature of the client relationship.
If, after research, you determine that increasing your prices is the right move, here are seven tips for passing those on to your customers.
- Rationalize your business case. Highlighting added features and benefits, along with evidence of increasing supply costs will disarm customers who oppose price increases.
- Provide options. Moving to pricing tiers or creating a rewards program could lesson the blow of a price increase.
- Cut through the noise. Test price elasticity—paying commission on margin instead of revenue would encourage your sales team to take ownership of the new pricing.
- Make price increases a habit. Create an annual process where costs and customer performance are assessed.
- Communicate clearly. Customers tend to have respect for providers that reinforce their values, such as paying talent competitive wages.
- Consider dynamic pricing. Algorithms are driving real-time price increases in many sectors of our economy.
- Think about timing. If you take incremental price increases on a regular cadence, you will condition clients to expect it. It’s important to provide adequate notice, so clients can adjust their budgets and systems.
Are increasing supply costs pushing you to make pricing adjustments? Or are you wanting to boost prices so that you aren’t leaving money on the table? Don’t make changes without the data to back it up. Schedule a free consultation or email us today at firstname.lastname@example.org to learn more about H2R’s Predictive Pricing Research.
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