The cost of living and running a business is rising. Banks and utilities are increasing their prices all the time. The unfortunate reality is we may need to follow if we want to remain in business.
This isn’t easy for many people, so here are some tips for what to think about.
1. Stay competitive – Research competitors, know where your pricing sits. Google, ask suppliers, ask customers who use them too, mystery shop. Knowing what competitors charge and how they justify this is very important for your own selling strategy.
2. Know your USP – When selling the same product as your competitors charge similar prices. If you do something no one else does, charge a premium. Focus here!
3. Position yourself as the experts – People will pay more for experts. Thought leadership – writing stories, articles, blogs, columns (like this one).
4. Customer satisfaction score – Chasing 100% satisfaction is a way to go out of business. But ensure you are satisfying the right customers first. Don’t give them another reason to compare.
5. Lean on your best customer relationships – Set the foundation, share good reasons for raising your prices, ask them how this might affect your business relationship. This conversation will give you good content for your increase notifications.
6. Pricing strategy – You may not need to raise all your prices. Separate high value (especially the USP) and lower value. A weighting towards high value means you might even raise them and lower others. The outcome is in your favour and customers may not see it as a negative.
7. Price increase notifications – Formally notify price increases well in advance so they have the opportunity to adjust their prices too if necessary. The best wording will even make some respect you more.
8. Wording to consider – Explain to customers why, and always paint your offer in the best light, be human and display empathy. Provide detail on the value, point out your point of difference, and how much you appreciate their business. Eg: “In order to maintain the level of service you have come to appreciate…; We ensure we only sell you the very best…; The cost of (x) has been increasing but for the last (y) years we have absorbed these increases…; Our (x) product is the only (y) in the market that does (z) in this specific way”. Consider presenting this as an opportunity: “We are improving the way we do (x) and you will find this better for (y)”. Offer support: “If you would like any more information about this increase…; If this increase does find you at a time of hardship please get in touch. We are here to help when we can”.
9. Topics for increase justifications – External: Material costs; Labour costs; Distribution costs, Industry Trends. Internal: Improved quality; Business growth to better service your needs.
10. Be direct and clear – Be brief with a few key points. Touch on the value your increase will bring and how it will be worth it. Be clear about how much and when. Being brief and direct displays confidence, vagueness does not.
11. Be regular – Don’t raise prices more than once a year. Small increases more regularly are better than irregular jumps.