Pricing products is all about profit. If you’re not getting paid what you’re worth or making enough revenue, a price increase is an easy way to fix that.
However, before you raise prices, consider both your current costs and any future cost increases liable to happen in the next year or two. A quick way to turn off customers is to deal with the hassle of a price increase only to turn around and do it again six months later because you didn’t think about future costs.
It’s important to consider that the ultimate goal with raising prices is to grow your business. The goal isn’t necessarily to acquire new customers or sell more products. Some clients won’t be able to afford your higher prices and that’s okay. Raising prices enables you to realize quality over quantity and find out exactly what a good customer looks like.
You can help ease clients’ pain about the higher prices by offering things like: product or service improvements, bundling packages, or new service options. Or take a cue from the restaurant industry and simply reduce serving sizes but keep prices the same.
Once you’re ready to raise prices, remember: timing is everything. Make sure your current customers are happy with your products and services before asking them to pay more. Also, if a one-off increase isn’t good for your business model, consider raising your prices on a consistent timeline instead. You could potentially raise prices at the beginning of every year or perhaps after a certain period of time with a particular client.
Deciding when to raise prices and by how much is relatively easy compared to actually communicating the increase to current customers or clients. A good first step before revealing the increase is to highlight the value and ROI of your products or services.
No matter how scary the prospect, remain confident in your decision and give customers a fair warning about any price bump. Keep the messaging simple and direct. You should explain the increase but don’t apologize for it, and never blame inflation. Lastly, but most important, always thank your customers.