The decision to raise your rates is a tricky one. But in the end it’s not the hike itself that’s important, it’s how you implement it.
Netflix, for example, put its prices up recently. And while their customers didn’t like it, after a few rumblings, the majority stayed on. So what did this entertainment giant do to make the pill easier to swallow?
They timed it.
They were about to release the new season of hit series House of Cards, Stranger Things, and The Crown, so were able to say to their customers ‘for the extra money, you’ll get brand new episodes of your favourite shows’. It was a smart move - adding value to offset the shock. There are other ways you can introduce pricing changes, in a way that softens the blow for your customers. Two strategies include:
Explain why the price has risen
You’ll find that customers will be more understanding if you take the time, upfront, to tell them why you’re introducing the change.
Perhaps there’s been a rise in the cost of manufacturing or delivery. Or maybe it’s been a long time since the last adjustment. Communicating these points clearly – and in advance - means your customers will have time to prepare, and will feel valued and respected. There may even be a rush on sales, as they’ll want to get in before the new pricing takes hold!
Whatever you do, don’t apologise for the increase. Instead, be confident and show the customer why it’s fair and reasonable.
Offer a bonus to offset the price rise
People honestly won’t mind paying more as long as they feel they’re getting value for money. Which is why it’s a great idea to announce a price hike, then at the same time let your customers know that they will be getting more than they did before.
Enhancing the quality of the materials you use, offering new options within your range, providing education, or even introducing new packaging for your product can help sweeten the deal and justify your move.
In the end, raising your prices doesn’t have to go hand in hand with losing customers. Often it can even lead to a better quality of customer – one who has a firmer grip on the value you provide.
Contact us for more advice on the right time and way to increase your rates.