Running a business means making tough decisions like creating the company budget or raising prices for your services. This can be no issue for companies that have dominated their market. They can practically raise their prices almost any time and few people will complain. But the same can’t be said about smaller businesses like yours. Price changes can affect your customer retention, and if you’re in an overly saturated market? Even adding a dollar will ruffle some feathers. However, if you’re in a narrower niche, you will definitely have some room to work with!
Let’s be real here, things are getting much more expensive by the year. Cost of materials, shipping, taxes, and other expenses are going to be eating into your profits if you don’t adapt. Not to mention the bank-breaking costs for groceries and basic daily needs. You will have no choice but to increase your rates just so you and your staff to survive. But how do you increase your rates without losing customers? How do you justify increasing your rates?
When should you raise your prices?
First off, let’s go over the reasons why you should be raising your prices in the first place. The source for your hesitation may be that you don’t really know why you should be charging more for your services.
So let’s quickly go over a few:
Increase in Costs
When company costs such as bills, cost of materials, cost of labor, etc. increase, so should your rates or else you will start losing your profit. Not increasing your rates will also mean sacrificing your own security. As basic necessities get more expensive, you will have to make sure that you are also making enough to afford economic security.
Periods of inflation are also appropriate times to charge higher rates. This is especially important for instances where inflation causes a significant increase in the cost to operate your business. For profitability’s sake, you will have to start charging more.
Can you offer a better deal at a slightly higher price than your competitors? Go for it! If you notice that your competitor is offering less for a higher price, add more value to your services and charge just a smidge higher and watch the sales grow! As you see, increasing your rates is essential for your business’s survival. So don’t feel too apprehensive when it’s time to charge higher for your services.
Raising prices is a necessary part of keeping up with your competition. It is also necessary to cover the ever-growing costs of materials. So, next time you’re feeling unsure about charging more for your products or services, think about the reasons we gave above.
4 Ways to Increase Your Prices Without Losing Customers
Now that we’re covered some of the reasons why it’s important to regularly increase your rates, let’s talk about some tips to successfully charge higher without losing sales!
Understand what customers are willing to pay
How have your customers reacted to previous raises? Do you have high customer loyalty?
Finding out your customer’s buying habits is key to figuring out when and how much you should be increasing your rates. To do this, you will need to look into your past data, and while that will surely be a lot of work, the end result is worth it. You also need to think about what you are selling. Are you providing goods and services that classify as a “luxury”? If so, then you might need to be more careful when raising prices. On the other hand, if you are selling necessities or are in a narrower niche, then your customers won’t have many choices besides accepting your price increase.
Focus on the value
Do your customers place a high value on the goods or services you are selling? And will increasing your rates mean that you are increasing the value that your customers will be getting whenever they make a purchase? The reason why your customers keep coming back in the first place is that they can get value from your products. Once they feel like they are paying more for less, it’s very likely that they will stop coming for your services.
Be realistic about what you can afford
We know that you want to give your customers good deals. But a hard pill to swallow is that you will have to increase your rates just to keep your business afloat. The costs for raw goods and other fees are already good reasons to ask more from your customers. Besides, you can always offer promos, sales, and bundles so your customers are still saving money in exchange for premium services.
Communicate price increases effectively
Once you have come to terms that you need to increase your prices, it’s time to give your customers the heads up. Informing your customers about a price increase prepares them for the upcoming change. But you can’t just drop by and say “Hey, I’m increasing my rates, thanks for your continued support!”. You have the responsibility to explain why you’re increasing your rates and what your customers expect to get in exchange for continuing their patronage.
Addressing your customer’s pain points is also another way to reassure them that you will continue to improve your services in exchange for their continuing support. Feeling a little bit unsure about increasing your prices is normal. We hope these tips have given you a good grasp on how to properly increase your rates without deterring loyal customers.
Save on shipping with GoShip
With all these price increases, you deserve a discount too! If you’re frequently shipping out goods, then working with GoShip is a fantastic way to save on costs. You get real-time tracking, professional staff, and premium services at affordable rates. Keeping your shipping fees low is one way to encourage customers to stick around. With GoShip.com, timely and secure delivery comes at a low price.
Check out the deals GoShip has for you and your customers by getting a free freight quote on their website.