At some point, every company wrestles with the question of how to increase prices without losing many of their customers. For small businesses, this issue can raise many problems, especially if their original strategy was to offer products or services free of charge or at incredibly low rates.
Unfortunately, it is almost certain that some customers will abandon a brand once they catch wind of a price increase. Price increases that are well executed, however, can help companies hold on to loyal customers and even gain new ones in the future.
Here’s how to boost your prices and keep your clients.
Be honest.
If you are genuinely losing money and need to increase your prices in order to stay in business, explain to your clients that your current price model simply isn’t viable. Nearly every industry has been affected by a continual rise in gas and food prices and some businesses just can’t afford to absorb those expenses without passing some of it to their customers.
Keep in mind, though, that people have a very limited tolerance for price increases. “If your idea of “reasonable profit” isn’t reasonable or if the price increase makes you more expensive than the (otherwise identical) competition, customers will bolt big time,” warns BNET columnist Geoffrey James. “They’ll figure that the real reason for the price increase is that you’re too stupid to run your company efficiently — or that you just want to remodel your kitchen.”
Continues at: 5 Ways to Increase Prices Without Losing Your Customer : Money :: American Express OPEN Forum.
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