Raising prices is one of the hardest things for many small businesses owners. It can be a huge risk because customers generally don’t take price hikes well. Every business owner must make the hard decision to raise prices or risk shutting their doors. The reality is you don’t have to lose clients every time you raise prices; especially if you know what to do.
Customers appreciate exceptional service and generally reward businesses for it. As a result, clients will happily pay extra for quality. Before communicating about the price increase, woo your existing clients with additional services. Over deliver so that your service or product value exceeds what they pay for; they will happily pay for the extra cost.
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Communicate the intended changes
Letting your clients know you’re going to raise prices builds trust between you and your clients. Surprising your clients and customers with price increases will put them off. It’s even worse to learn of the price hike when they are ready to pay. Let your clients know you will raise prices and give them a good reason why.
Explaining to your clients the reasons you’re raising prices can be a challenge. Your responsibility is to differentiate yourself and your service from the next competitor without using price as a factor.
Take time and let the clients know why you are raising your rates and how doing so will lead to better results for their benefit. Emphasize how they will benefit with the new prices and focus on how they can expect even better customer service.
Before announcing the new prices, make sure your current clients are satisfied with your products or services. Technology has made it easy for companies to interact with their clients. All a company needs to do is go online to check reviews or call clients for feedback. Announcing price hikes for a company with glowing reviews can have a positive impact compared to a business struggling with a bad reputation.
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Add something extra
What can you throw in the package that will cost you little, or nothing? What bonuses and additional services can you offer? In a recent session I hosted, I shared how a plumbing business raised prices by offering a free water-waste evaluation as a bonus.
The plumber evaluates a potential client’s water usage to determine if there are cost saving opportunities. If those exist, the plumber could offer an additional package at a higher price. There’s always an opportunity to boost your business and raise your prices by giving a bonus for the price change.
If handled correctly, raising your prices shouldn’t have a negative impact on your business. After all, every business goes through growth phases and will have to revise their rates at some point.
Finally, ensure that your employees understand the reasons behind the change in prices so they can effectively communicate those changes with your existing clients. Raising your prices is necessary for increasing your sales. More importantly, raising your prices can lead to delivering better services for your clients.
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About Ebong Eka
Ebong Eka is no stranger to the world of personal finance. As a certified public accountant and former professional basketball player he offers a fresh perspective to small business planning and executing. With over fifteen years of accounting, tax & small business experience with firms like PricewaterhouseCoopers, Deloitte & Touche and CohnReznick, Ebong provides practical money solutions tailored to the everyday person, the aspiring entrepreneur or the small business owner.
Ebong is the founder of EKAnomics, a sales, pricing and leadership firm. He is also the founder of Ericorp Consulting, Inc., a tax and management consulting firm. Ebong is the author of “Start Me Up! The-No-Business-Plan, Business Plan.”
Ebong is also the founder of The $250 Tax Pro, which provides tax preparation and consulting services in the Washington, DC area.
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