We’ve all been there—that moment when you realize your prices are too low. Either because you’ve gained more experience, the cost of living has gone up, VAT is now 18% or you just started too low for the market. Whatever the reason, it’s common to worry about how your customers will take the price hike and whether they’ll stick with you despite your increased prices. These are some strategies for raising your prices without losing business.
Don’t apologize
When you announce your new prices apologetically, you project to your customers that you aren’t confident about your rates. They’ll think you’re too expensive and either take their business elsewhere or try to negotiate you down. Instead, state clearly that your prices are going up as of a specific date and thank them for their business.
Strike while the iron is hot
Prices going up because the government has increased taxation? Expenses are going up everywhere, so customers will not be surprised when yours rise too. But if you wait too long, they’ll have already forgotten all the other price hikes, so yours will seem sudden.
Don’t worry, though, all is not lost if you didn’t raise your rates as soon as VAT went up to 18%. You can still make a change. Let your customers know that they’re getting the same great quality and what date the price change is happening, giving them some time to adjust to the new price.
Give a discount
When raising prices, it can be a good idea to offer a discount to loyal customers. You can do this by offering special rates for advance payment or for buying in bulk. You can also offer a package of two services or products at a better price than just one. Bonus points if the second item in the package costs you very little or nothing.
Higher rates for new customers only
Another strategy is to keep your current customers at the rate they’re already paying and raise the price for new clients only. This is a more gradual technique, since it will take a while until your natural turnover brings you more higher-paying customers. Got prices listed on your website? Send loyal customers a coupon code good for the next year, so they can keep getting the lower price and enjoy getting special treatment.
Be prepared for negotiation
Israelis love nothing better than negotiating. The shuk mentality is alive and well in all aspects of life, so don’t be surprised if some of your customers don’t take your prices at face value. Before you send out notices about your increased rate, plan what you will do if some of your customers come back to you with a counter-offer.
Will you negotiate at all? If so, how low will you go? What can you offer them that will be a win for you as well? If negotiation is on the table, you may want to list your prices slightly higher than the amount you really want, so you have wiggle-room to give discounts.
If there’s no room for negotiation at all, be polite and firm about sticking to your price and be prepared for some customers to bail. And that’s OK, because you’ve just opened up the door for new higher-paying customers to waltz in.
Raising prices can feel daunting, but with careful planning and confident communication, you can implement necessary adjustments without significantly impacting your customer relationships.
