With inflation at the highest rate that it’s been in nearly 3 decades, many small businesses are really feeling the pinch. Unfortunately, it doesn’t look like the rate will decrease any time soon and small business owners are left to grapple with the challenge of raising their prices. While you may be reluctant to raise prices, it’s important to keep in mind that the longer you wait to do so, the longer you’re giving patrons an unintended discount—and eating away at your profits.
If you’re putting off increasing prices because you’re worried about having unhappy customers, consider these tips to help you raise your prices without losing your customers.
Don’t Beat Around the Bush
A lack of information could result in customers becoming disgruntled and turning to your competitors, so be clear, open, and honest about your price increase. Be sure to provide a meaningful, yet direct explanation well in advance of any increases. Avoid sounding apologetic, but be sure to acknowledge that you recognize that price increases are unfortunate. You should explain your reasons for raising your prices and provide some key information about any updates to your services or products.
Justify Your Price Increase
Consider what your reasons are for raising prices. Will you be providing better service or a faster turnaround time? If so, let people know. One way to communicate this could be by saying, “Beginning on January 1st, (insert service/product) will come with even more perks. They are x,y, and z. Our new prices will allow us to better serve you by…”
If, however, you are raising prices solely due to the changing market environment, make sure to express that in a way that justifies your reasons. Address your emails to your customers directly and say something like, “Due to increased shipping and material costs, our company will be making small price adjustments to ensure that we avoid sacrificing the quality that you’ve grown to expect from us.”
Increase Prices Gradually
When you raise prices, it’s important to do so periodically in smaller increments so it’s less of a shock. If price increases are too drastic, your customers may become annoyed, and your reputation could be damaged. If you know you want to raise prices by 15% by the end of the year, you could spread the increase out over the course of a few months.
Bundle Your Products or Services
One way to make price increases easier to swallow is to repackage what you offer. Think of ways to create product or service bundles with new add-ons or extras that don’t cost your business that much money. This could be something as simple as offering gift wrapping services for products that you sell in your store or online.
Inflation isn’t going away in the near future, so as a small business owner, it’s critical to implement necessary business strategies now to increase prices the right way. Not sure where to start? We can help. Contact us today and one of our dedicated relationship managers will discuss your needs in order to determine the best product for your business. We are here to help, every step of the way.