Many business owners are hesitant to increase their rates, but sometimes, that’s the right thing to do. Products become more expensive, and as you gain experience, the quality of your service increases. Don’t sell yourself short!
Increasing your rates does come with some inherent risk. However, if you use the right strategy, you can help it to go over smoothly.
10 Ways to Raise Rates without Annoying Your Customers
- Add a Fee or Raise an Existing Fee: Instead of increasing the price of your actual service, consider adding or raising a fee. This is an especially good strategy if you want to increase your prices only temporarily, since you can easily get rid of the fee later.
- Bundle Services: Give customers a break when they buy more than one service or product from you. For example, if you run a lawn care company, add an option for including mosquito treatment at a reduced price.
- Time it Right: Increasing prices is best done when you are certain your customers are happy with your services. Plan your price increase ahead of time and try to make sure that when the time arrives, you’ve been proving your worth to your customers for the past several months.
- Add in Extras: Is there any extra service you can provide? Adding in some tangible upgrades or extra services—such as a free eBook or free gift wrapping—wouldn’t cost you much but would add increased perceived value.
- Target a New Market: See if you can aim your services at a more affluent customer base who is likely to have a larger budget. That can offset the customers you may lose.
- Reduce the Quantity: Reduce the size or amount of your product. Many restaurants use the tactic of keeping the price the same while decreasing the portion size. Be careful though. If customers do notice, this strategy will backfire. A more subtle way is to dramatically reduce size, along with a steep price cut. For example, if you sell a ten-pack of your product for $100, create new options, such as a five-pack for $70 and/or a three-pack for $40. Then, you can raise your 10-pack to $120 and it will seem like a bargain.
- Increase Quality: Improve your product or service. For example, if you run a clothing company, increase the quality of the fabric. If you run a restaurant, change up the menu items. Even something small, like updating the packaging, can increase the worth of your product.
- Offer Discounts: Increasing the prices may result in losing price-conscious customers. Try offering occasional deals to keep them. You’ll still get plenty of full-price purchases, all while keeping bargain hunters happy.
- Prepare for Backlash: Increasing prices is bound to upset some customers. Be prepared to explain the increase in person and on social media.
- Raise Your Rates at Normal Intervals: If you can schedule your rate increases at intervals that make sense, you may ruffle fewer feathers. In fact, many of your clients may even expect rate increases, especially at the beginning or end of the year. It’s also a good idea to plan so that rate increases fall on a manageable schedule. Trust us, it won’t be fun if you go through this process now, only to find you need to do it again four months later.
When it comes time to sell your business, having an established schedule for rate increases could help you seem more attractive to buyers. And if you need help selling your company, you can always contact The Bridlebrook Group. Not sure when the best time to raise prices is? Learn more.