As a business, there’s a difference between your work behind the scenes and what your clients can see.
However, some of your decisions will heavily affect them. A price increase is one such decision.
This decision will always have a hostile reception (for obvious reasons). Still, it doesn’t have to be that bad if you do things right. With that in mind and without further ado, here’s how you can be more transparent about a price increase and show your customers that trusting you wasn’t a bad idea.
1. Recognize the need for a price increase
The price increase cannot be random or arbitrary. You have to know why you’re doing it and when’s the best time to do it. So, you need to start by recognizing the need for a price increase. Developing skills in setting lemonade prices as a kid can be an early lesson in understanding market dynamics and business strategies.
You must start by evaluating your business costs and the current price. This way, you’ll see profitability. There’s nothing wrong with doing business at a loss if you’ve already planned for it. For instance, for the first few months until you penetrate the market. You may also lose money on one product to make money elsewhere or successfully cross-selling or upselling.
In other words, losing money is not always bad, but it’s never a preferred choice. More likely than not, if you’re losing money, you have to do something about it. Most likely, change the price.
Next, you need to research your competitors. No matter how hard it is, you can’t go too far below their price. Then again, you also want to understand their price. Can they afford to charge less than you? Do they have the justification to charge more? For example, suppose your product is a field service CRM. In that case, your competitors might be charging less than you simply because they have fewer features that meet your customers’ pain points, such as a lack of communication history or visibility amongst team members.
Most importantly, there are ways to justify this price increase. For instance, improving the product or adding a new feature can be a great reason to bump the price. Just think about the difference between iPhone generations and their cost difference, and you’ll see that the ratio won’t always match.
2. Pick the right time to give an announcement
You must announce a price increase in advance. Your customers may have to plan accordingly and adjust their budgets.
Sure, you won’t have to worry too much about it in some industries (not even one-time purchase fields like selling chess sets). For instance, if your monitors are going up, someone who bought one last month has no reason to worry (or even think) about it. However, what if you’re selling supplies or raw materials?
When the price of supplies goes up, many businesses have to make adjustments. They may have to adjust their prices, and some may no longer find it worth it to run a business. Remember that the end cost is usually passed down to the consumer, but you must acknowledge that this will be a massive change for some of your customers. Respect them enough to notify them in time so that they can figure out what to do about it.
There’s also a difference depending on your charging model. It’s one thing to increase the cost of your products (that your customers already bought or plan to buy), but it’s something entirely different to increase the cost of your subscription service. In the latter case, making the announcement enough in advance can help save your customer retention.
If you’re in the service industry, like the salon industry, you’ll probably want to let your loyal customers know in person before they hear it elsewhere. If you have the right salon booking software, you can track who you’ve informed about the price increase and who still needs to be notified in their next appointment.
3. Utilize scheduling software for communication
The next thing you want to do is automate this process. With so many customers, you can’t reach out to every one of them personally. So, you need a customizable email template and a scheduling software. You can hire a software development company to tailor these tools to your specific needs to reach your clients more efficiently. This way, you can ensure that they all get the notification at the same time, as well as that they all receive the same message. Transparency and equal treatment are both essential.
On the other hand, some of your biggest clients may need an appointment. There, you’ll have to try to work it all out together. Now, remember one thing: the period you have to adjust your price is often very chaotic. No, this is not one of those weird coincidences; price changes don’t happen in a vacuum. A changing market usually instigates this need for a price change, which comes with much other work.
By scheduling these appointments, you’ll have a far easier time communicating this new change.
It’s also worth mentioning that you want to remind your customers of the price change next time before they book an order. We know it sounds counterintuitive, but many people will forget that they’ve received this information. Then, when they get a higher receipt than expected, they’ll grow dissatisfied.
4. Utilizing other means of communication
Sometimes, how you let them know is almost as important as letting them know. Now, to ensure that no one misses the message, you should send out this message through several different channels. Sure, a personalized email campaign is the most obvious choice, but you don’t have to stop there.
You should also announce this on your site. According to Webflow agency specialists, you must do so on the homepage and banners. This way, any visitor to your site will be informed and reminded that the price is changing. You can even create a countdown timer until this change so that people have a chance to buy the product beforehand. This way, you can turn this inconvenience into a marketing opportunity.
Additionally, employing photographers to capture high-quality images of your product can significantly enhance these announcements, making them more visually appealing and likely to catch the eye of your audience.
Social media announcements are more than adequate, especially since people sometimes follow you on social media without even being aware. This is an unexpected announcement that might just grab their attention.
Lastly, even old-school outreach methods like SMS and phone calls can be effective. The bottom line is that the more channels you use, the lower the chance someone will miss the message. Why is this so important? If they miss the memo, they’ll see it as your mistake, not theirs.
5. Crafting a transparent and empathetic message
A message that you’re raising the cost of your services or the price of your products will never be seen as a positive one. People will be inconvenienced, displeased, or even outraged. This is why you need to send a sensible and empathetic message to try and remedy this problem. Coincidentally, an empathetic message will also increase the average visit duration, one of the most significant SEO ranking factors. It’s a win-win scenario.
Start by explaining why you’re increasing the price. Ideally, it will be due to the costs of developing or maintaining a new feature. Even if it’s just due to inflation and your own cost of running a business increasing, your audience should understand.
We’ve previously discussed losing money to break into the market. While this makes sense strategically, it’s a horrible argument to present to your audience. “We just wanted to outmaneuver our competitors” or “We just wanted to draw you in” are not statements that will evoke any understanding.
Remember, people are putting themselves first, so you must find a way to craft a message explaining how this action serves them, not vice versa. Sure, a price increase can hardly be in their favor, but if you offer them new features, reassure them that you sympathize with them, and promise that it will be worth their while in the future, you might make it work.
Let them know that the reason they’re here still holds up. You still care about them and have their best interest at heart. You’ll keep delivering quality service.
6. Gathering feedback and- addressing concerns
People will be displeased with the price increase at the very least; however, you must figure out what displeases them the most. You should keep your ear to the ground and figure out how outraged they are. Are they just disgruntled, or are they ready to leave?
There are a few ways for you to figure this one out.
First, you need to ask your customers directly how they feel. You’re not feeling them out to see if you should raise the price; the answer will always be no. You want them to express themselves so that you can figure out the general sentiment.
Next, you should watch out for brand mentions. You want to know what they discuss when they think you’re not listening. Their interactions with you and their discourse about you will be much different. Make sure to listen to both.
Just remember that you’re not gathering this feedback just for trivia. You need to do something about it. So, prepare to make adjustments whenever it feels necessary. Just keep in mind that you also need to have some tolerance for criticism. You can’t dial back your price change because your customers complain. You need to show some integrity on this front.
Conclusion
Ultimately, some business decisions affect your customers more than others. A price increase may mean they can no longer afford to keep your subscription or get supplies for their business. Still, if you let them know in advance, they can adjust to maintain this relationship with you as a strategic vendor.
Just keep in mind that this decision won’t be easy, which is why those who stick around with you deserve your respect and gratitude. Make sure they feel they’ve made the right choice and trust you.
Nebojsa is a seasoned professional in the SEO and link-building industry with significant expertise and a history of leading successful teams. With a keen focus on client satisfaction, our team at Heroic Rankings has built a reputation for hard work, high standards, and consistent results.
