BUSINESS STRATEGY & GROWTH • April 28, 2015
1 minute Read
Are you wondering how to boost prices without sending your clients running? Here are some strategies:
Do it incrementally. If you’ve kept prices stagnant for years, you may need to incorporate a hefty bump to catch up to current costs. Consider spacing small increases over the course of a few months to a year to get your business where it needs to be. And going forward, raise rates by a small percentage at regular intervals—every year, for instance—to avoid surprising customers with an unexpected price hike.
Raise rates for new customers only. If you’re concerned that boosting rates for older clients will send them elsewhere, consider grandfathering them in. That is, as long as they stick with their product or package, they’ll pay what they’ve always paid, but new customers—or an old client choosing a new package—will pay your new rates.
Offer old customers an upgrade first. If you’re raising rates on all of your packages, consider offering current clients the chance to move up a tier before the bump. They’ll appreciate the insider advantage, and you’ll still be getting more income from the upgrade than you were before.
Add value. Soften the blow by adding some small bonus to whatever you’re offering, even if it’s minuscule—an added feature, a webinar or an included service, for instance. That way, customers won’t feel like they’re paying more for the same thing.
Charge by the project, not the hour. If you charge by the hour, you actually make less money as you get more efficient, even if you’re doing the same work. Charge for what you’re accomplishing, rather than how long it takes you to accomplish it.
Explain the change. If you’re raising rates because the price of gasoline has gone up or one of your materials is harder to procure than before, let customers know. No one expects to pay the same price forever, and if you have a good reason for the raise, many customers will understand.
Sell pieces of a set. If you’re offering a package at one price, list the individual components of that package at higher prices than the whole. Customers who don’t want the whole bundle will buy one piece and pay more for it.
You’re not in this alone. Approximately four percent of small business owners raised selling prices last year, according to the National Federation of Independent Business, and an additional 29 percent planned to hike rates in the next few months. By implementing one or more of these strategies, however, you can minimize customer sticker shock and keep their business.
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