There are many justifications for price increases. Working through an annual price review is, in fact, widely regarded as a recommended practice for businesses. But there are also extraneous forces at play. You can decide that it’s time to boost your prices due to factors including inflation, supply chain problems, pay hikes, rival price increases, and more. One thing is constant, regardless of your motivation: anxiety over how to explain it to your devoted clientele. We suggest you be honest but kind. An inevitable aspect of operating a business is price rises.
4 Ways to Increase Prices—Without Backlash
Even if it’s to account for inflation, most companies eventually need to raise their pricing. On the other hand, notifying your clients or customers is a far more delicate topic that needs to be handled carefully to prevent resentment and fury.
To help guarantee that your rate increase goes well for your employees, your customers, and your business, follow these four steps.
1. NOTIFY YOUR TEAM FIRST
After deciding to change prices, your first business order is to inform any employees. After all, this move will impact everyone, including those who are not part of your customer service staff. Make sure everyone is aware of the situation and ready for a pricing change. This is also perfect for getting together with your team and planning their messaging when inevitable client comments and inquiries come in. Find potential issues and inquiries from your clients, and prepare your staff’s responses in advance. This guarantees that your team won’t respond incorrectly to dissatisfied clients and that they can effectively handle potentially embarrassing circumstances.
2. GIVE CUSTOMERS ADVANCE NOTICE
You need a strategy for delicately informing your clients of the price rise since they should hear it directly from you. Consider the last time you heard a faceless message from a company about a concern you had. How did you feel after that? Not good, likely. The same holds true for your clients. It’s possible that many of them will have to decide whether your new prices are within their price range. If not, they’ll need time to change their spending habits to continue doing business with you—or find a replacement—before your price rise takes choice. In either case, you want to make sure that your consumers still feel cared for even though you’re not providing them with good news. Start by informing your current consumers or clients of the price increase two to three months before the date of the hike. Use various techniques to carry out this, including how you often speak to them.
For instance, if you frequently publish updates via email newsletter, you’ll probably be able to connect with the majority of your clients that way. However, not everybody looks at their email. Utilize additional channels to communicate with those clients so they won’t be taken aback by the rate hike. Several possibilities are:
• Placing a banner at the website’s top updating the company’s social media accounts with the news
• Writing price increase notices to clients • Making direct phone calls
A few weeks before your price rise, send out an additional email to clients to remind them of the change. You can use this message to encourage customers to purchase your goods or reserve your services before the price increases.
3. DIRECT CUSTOMERS TO AN FAQ PAGE
Customers could ask similar queries regarding your rising rates. However, the majority of contact channels don’t provide you enough room to respond to all of them, and you also want to show your clients that you value their time. You may address your consumers’ most important queries and worries at their convenience by providing a FAQ page on your website. Additionally, this may lessen the number of inquiries from worried or irate clients that your customer care, sales, and social media teams receive.
You might find it helpful to provide the following details:
• Additional information about the price increase, such as the day the new rate will take effect
• The change’s context and justification—make sure it’s about enhancing value for them rather than the pain points you and your company are going through.
• How clients can terminate their contracts or discontinue their membership
• Who to contact if they have any further inquiries
Update your FAQ page as necessary so that it contains all the information your consumers require in one location as new inquiries come in.
4. START WITH NEW CUSTOMERS
As they haven’t worked with you before and are still establishing opinions of you and your company, new clients offer you a marvelous opportunity to try out your enhanced pricing. Almost immediate feedback will let you know if your new prices are too high, too cheap, or exactly right. If you set your price too high, every new lead will flatly reject your offer. If you set your price too low, you can discover that almost everyone accepts it to help from savings. Ideally, you want to get to a number that meets your needs and is accepted by most of your eligible prospects.
How to Communicate a Price Increase
BE DIRECT AND CONCISE
Be honest with your customers now rather than trying to sugarcoat the situation. Tell them in no uncertain terms why your prices are rising. By labeling your price rise anything other than, you won’t do them any favors. Actually, being unclear can confuse your clients (for example, don’t state price adjustment when it’s a price rise). Indicate in your letter that your rates are rising, give the reason why, the date the price rise will take effect, and a list of any actions they need to take. Keep in mind that this isn’t the place for a drawn-out essay. Just state what you have to, and if readers want additional details, they can check out your FAQ page or get in touch with someone on your team. Writing less will simplify communication and provide less room for misunderstanding or ambiguity.
DON’T APOLOGIZE—SHOW APPRECIATION AND EMPATHY INSTEAD
You also don’t want to be overly sorry in this situation. Price fluctuations are a regular occurrence in the corporate world. You must ultimately consider what is best for you. Turn things around and express gratitude and empathy for your customers rather than making excuses. Because of their business, you have only been able to expand your own. Write to your customers directly and steer clear of corporate jargon. As you express gratitude for their ongoing assistance, offer to make this move less difficult for them. The most important thing to remember is to avoid making light of the issue, especially if the good or service you offer is essential to their daily lives or businesses.
PROVIDE JUSTIFICATION FOR THE DECISION
The way you defend your price increase could make the difference between an incensed and a sympathetic customer. Your clients will be less likely to think that you are raising costs solely to boost sales if you provide them with an explanation for your decision that they can understand (and perhaps even connect to). They should be more accepting of the shift and grateful for your openness about it.
Briefly justify the price increase in your own words (again, ditch the corporate speak). Try to be as detailed-free as you can without losing the big picture. For instance:
• Has the product’s caliber improved?
• Have your improved outcomes been aided by your new equipment or training?
• Has your industry seen an increase in the price of raw materials or distribution?
Anywhere you can, give them value to connect their additional expense to the advantages they receive from your goods or services.
It is only reasonable for them to understand your initial rationale for raising your prices if they must pay more to continue doing business with you.
LEAD WITH VALUE
Reminding your clients of the benefits of working with you and the things they can look forward to from your company going forward is a beautiful idea right now. Can they expect better service or higher quality with this update? More products at the exact cost? Free addition of one more month to their subscription? Please be as precise as you can. You could want to describe all the extra products or services your clients will now receive if you’re switching from hourly pricing to value-based tiered pricing, for instance, to prove that your new pricing alternatives aren’t underwhelming. This is also a marvelous moment to announce any impending releases or new features that your customers will be interested in.
Raise Your Rates While Keeping Your Customers Happy
You put a lot of effort into growing your company to where it is now. But you’re doing yourself a disservice if you don’t routinely increase rates to consider business development and future needs. Nobody’s to-do list includes telling your clients about a rate rise. By implementing the advice mentioned above, you’ll be better positioned to inform your consumers of the change and assist them as they adjust.