Would your business benefit from lifting its prices? The current environment is heaping pressures on businesses, so to keep things viable and growing, you may need to reset your pricing. Here are a few ideas to give you confidence about communicating price increases while you retain your brand's value and customer base.
Start by sorting your pricing strategy
It's vital to be clear about your pricing strategy and cost drivers before raising your prices. Reviewing the price positioning of your brand is an excellent place to start. Our blog piece on pricing strategies explores some of the most successful approaches. Your strategy can give you clues about messaging that best aligns with your customer's expectations.
When you know what value your customers find in your brand, you can emphasise this when you communicate with them. For example, if you have a premium brand, customers may be receptive to messaging around high-quality but more expensive raw products. Look for the things that give your business its unique edge.
Begin with clarity
To communicate increases well, you'll benefit from knowing why you need to increase them in the first place. External factors include inflation, exchange rates, higher production costs, and the value of parts. Internal factors include staff costs, capacity limits or changes in your delivery model. Carefully considering these things may reveal alternative or additional options to lift your profit margin. Similarly, you may spot ways to help offset price increases for your customers. For example, perhaps you could lower prices for large production runs that have scale savings. Packages of products may allow people to save on shipping whilst simultaneously lifting the volume of your sales.
Choose the right timing and channels
Timing is important when it comes to increasing your prices and announcing the changes. To maintain trust, avoid surprising your customers and give them time to plan. Your wording should be clear, confident, empathetic and tailored to your target market.
Almost as important as the messaging is the method. Think about how your customers would most like to receive the information. For some businesses, such as a café, signage in-store may be practical and powerful. For many retail businesses, social media is a useful place to share news. If your clients are businesses themselves, notes on invoices and emails may be more appropriate.
Show appreciation and reward loyalty
No one likes paying more, but people will often accept cost increases if you make them feel good about coming back. Rewarding loyalty and giving excellent service can easily outshine and outlast someone's momentary disappointment about price changes.
As you transition to your new pricing structure, you could win hearts with loyalty rewards or other ways that show appreciation. This is especially important for key clients – show them they're valued with dedicated communications.
Address customer concerns and questions
You can expect customers to have some questions. You and your team will be more relaxed if you're ready to address any queries. Beware of leaving uncertain staff on the front line without enough support.
If your team is equipped with honest explanations for the changes, they'll feel more confident when they answer questions, and so will those they're serving. As a business owner, you have a range of ways to support your staff around this, such as training, professional development and personal support.
Seek feedback and maintain open communication
Good communication is a two-way street. You may uncover opportunities to finesse your communications if you welcome feedback from customers on any pricing increases. In fact, a well-handled customer query can actually strengthen loyalty and satisfaction.
Although it may feel daunting to tell your customers that prices are increasing, your business's viability is crucial. Reviewing the impact of price increases will make your communication strategy and messaging clearer and more effective. Gaining a deep understanding of your pricing and costs may be the most difficult part; once you have this clarity, you can empower your team to help your customers feel well-informed and appreciated.
A Business Mentor is the perfect supporter for any business owner navigating transitions and decisions around pricing. Not only does a Mentor provide an empathetic sounding board, but they also bring experience and insights that can save you time and mistakes. You can apply to find your match today at www.businessmentors.org.nz