While inflation is beginning to ease, prices are still at an all-time high for both customers and businesses. You’ve likely experienced it yourself, whether from your suppliers, on critical business expenses or even your daily coffee. With recent price increases, you may be pondering a price increase of your own - but, by how much? When is the right time for a price increase? Also, how do you notify customers of a price increase? And most importantly, how do you raise prices without losing customers? Well, we're here to answer all these questions and set you up to handle a price increase.
First off, there’s no set time. Every industry and business is different, so it really depends on what’s going on within your field, and, most importantly, your own business. With this in mind, here are a few indicators to keep an eye on.
There’s a balance to strike when considering a price increase, too high and you alienate your customers, too low and you’re undervaluing your time and product, as well as cutting into your profit margin. With this in mind, there are two things to consider, what the market is doing and what your current costs are. Both are crucial to striking this balance.
See what your competitors are doing around you. Market research will keep you priced reasonably and within your customer's price range. If you choose to price above what your competitors are doing, make sure your services are reflective of this jump - particularly if there's a noticeable difference, as well as reinforce the value you offer compared to the competition.
Of course, you still need to consider current costs to ensure they're covered! That's the whole point of this after all. Your new price should cover all your current costs, ensure you're profit margin is secured, as well as include a buffer to make sure you don't need to raise prices in another 3 months' time.
Price increases aren't uncommon these days (we've all been on the receiving end of a price increase email, Disney+ we're looking at you), but there's definitely a right way to communicate a price increase. If you're wondering how to tell clients about it here are the 3 things you need to include.
While that’s the basics laid out for your price increase, here are a couple more things to help ease the way.
There ya go! Everything you need to handle a price increase the right way, if you're on the lookout for more tips about all things marketing and business management, be sure to check out our other blogs here.