Raising Prices and Keeping Customers
With inflation at record highs and a recession becoming more of a possibility, everyone is feeling the pinch—especially small businesses. We’ve become quite used to low inflation, low prices, and a strong economy. But now, after 2 years of a pandemic, supply chain chaos, and labor shortages, the tables are turning. If your business is struggling with the idea of raising prices, bear in mind there are ways to soften the blow to your devoted customers without alienating them. Here’s how…
Hit Your New Customers First
You’ll need to understand how your higher prices are going to go over in the market, and the best way to do that is essentially a “test run.” Raising prices to new customers before you hit your existing customer base is a great starting point. Your new customers aren’t sold on your existing pricing structure anyway, so to them this is just standard business. And if these higher rates don’t gain traction with those folks, that just served as your litmus test to what’s not acceptable for your business. When your new clients are on board with your adjusted pricing, that gives you leverage and evidence to present to your existing ones that this is an effective strategy—and one that you’re going to have to move forward with.
Move on to Existing Folks
Chances are your business is successful because of your existing customers. You owe it to them to give advance notice about any price hikes. And to make it more palatable, be sure to remind them why they shop with you in the first place. Your value proposition comes into play here nicely: Highlight what gives you the competitive edge, what sets you apart, and what value your business brings to its customers. And finally, be available to answer any questions people may have.
No one wants to see price hikes. We’re used to it, however. And one of the key reasons is because the best companies communicate these price increases in an effective, unapologetic, and data-backed way. Consumers are often conditioned to think that businesses just want to make more profits, hence the price increases. If you make it known that the reason you have to go down this road is because the cost of doing business—just like the cost of living—is rapidly increasing, your clients are more likely to be understanding. Plus, effectively communicating this change beforehand will give people the chance to determine whether doing business with you is worth it anymore. Your customers deserve transparency. And no one wants to be surprised at the register when their meal costs more than it did 2 weeks ago.
Make it a Habit
It’s generally good practice to get customers accustomed to regular price increases. You want to set that expectation so they’re not surprised when your goods and services are more expensive than they were 1 year ago. Renters, for example, are always aware their monthly rates will increase annually. It’s a routine part of renting. The more prepared your customers are, the better your increases will be received.
The industry-leading financial products we offer at ARF Financial are the best way for you to reach your business goals. Whether it’s a revolving line of credit, interest-only Flex Pay loan, or bridge loan, we’re ready to help fund your success. Visit us today and learn more about the benefits of working alongside the expert loan consultants at ARF Financial.