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Between the rising gas prices, the cost of food, and food shortages, every entrepreneur can agree that revisiting the budget is no longer just an option. Even the essentials of life has increased. Have you noticed that everything from hair cuts to bacon have increased? Nearly nine in 10 Americans say they have noticed prices rising around them, according to a survey conducted mid-February for The Upshot by Morning Consult. Of course, as entrepreneurs, we have empathy for individuals who are struggling financially, especially in this economic climate. As you extend compassion, be reminded of this truth: you need to make money.
Just case no one has ever told you, you don't need approval from any of your clients before you raise your prices.
There is nothing sinister or greedy about the need to raise your prices to receive your revenue. It's admirable to desire more and have every right to do it. Just case no one has ever told you, you don't need approval from any of your clients before you raise your prices. It's your business. Maybe you've decided to stop underselling yourself. Maybe you're changing the framework of your brand. Whatever your reason is, give yourself permission to desire more.
When you raise your prices it often makes a big difference to your bottom line without affecting your loyal clientele. Don't be afraid of asserting your value to your clients as you raise your clients. Your brand should already been something that they choose no matter the cost. We are going to list 5 ways to raise prices effectively.
...business improvements are meant to justify the price increase.
Raise fees
You can avoid raising prices on your actual product or service by adding fees. Utility companies do this all the time, and many smaller businesses used this tactic when gas and electricity prices soared a few years ago. Examples of fees that relevant to 2024 are: transportation fees, convenience fees, technology fees, processing fees. This is a great strategy if you think your price increase will be temporary because you can easily remove the fee when the need for it is over.
Add Improvements
Customers are more willing to accept a price increase if it’s accompanied by improvements to your product or service. A few examples of improvements can be:
new menu items in your restaurant
new packaging for your product
revised brand design
add on's to service or products
new software or CRM system
consistent email marketing
Remember, business improvements are meant to justify the price increase. We highly recommend that these improvements are highlighted in your marketing and branding plan.
Raise Your Prices At Pre-Determined Intervals
If your business is service-based, such as a hair salon, lawn-care business or cleaning service, your customers expect price increases from time to time. If it's justified, raise prices at the beginning of every year or after a customer has been with you for a year.
If your services are provided on a month-to-month basis, offering a six-month or year-long contract at a lower cost than the month-to-month rate is a good way to lock in customers who want to avoid the price increase.
Play the numbers game
If you normally sell a 10 pack of custom tees for $100 but you need to raise the price to $120, create some additional, different-sized packages, such as a five-pack for $70 and a three-pack for $45. This makes the 10-pack seem like a deal, even at the new, higher price. This may not be the best option for service based businesses.
Rebrand Your Business
Invest in logo creation, website development and email marketing. Ensure that it is professional done because the quality of the re-brand justifies the cost increase. Be reminded that a brand refresh is more than color schemes, it involves the philosophy of your brand. When a brand sells products, it’s selling a story. When consumers buy products, they are buying into this story. Moreover, knowing your customer and having a concise workflow to ensure business success encompasses a successful brand refresh.
In summary, before raising your prices, make sure you’ve considered not only your current costs but also any cost increases that are likely to happen in the next year or two. Make sure you have a strategic plan for your price increase. It's unwise to invest in raising your prices only to find four months later that you need to do it all over again.
Happy Invoicing.
Dr. Dee Evans
CEO, Koinonia Training and Consulting
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