Tips to increase the success of implementing a price risePublished on 24th April 2018 - Last update on 8th January 2019
Although becoming your own boss can be very exciting, maintaining your business can be difficult. Sometimes you may feel like you’re constantly walking a tightrope between pleasing your customers and tending to the needs of your business. However, there may come a point where your hand may be forced, causing you to raise your prices. This can be a daunting time for any business owner, as there’s no telling how this may affect your customer base and ability to attract new business. But if you take the time to think it through, you may figure out a way to break the news without losing too many of your customers. To help you achieve this, whilst pleasing both parties, here are a few steps you can take before raising your prices.
1. Assess whether you’ve explored all possible alternatives
Before setting your sights firmly on raising prices, make certain that you’ve thoroughly weighed up your options first. Are there any other ways in which you could make your business more sustainable? Does your business need restructuring? Do you need more energy efficient equipment? Could productivity be improved? If the answer is yes, rather than raising your prices, it may make more sense to apply for business finance and invest in the growth of your company instead.
2. Be honest and explain why it’s needed
As always, it pays to be honest. Although nobody likes having to pay more, explaining the reasons why it’s necessary can help you and your customers see eye-to-eye. So, rather than simply saying reduced profits, which could reflect negatively on you as the owner, inform customers that the move comes on account of rent increases, a change of supplier, equipment costs, energy bills or any other factors which may be relevant. Being upfront could earn you their understanding and make them more willing to pay a little extra for the goods and services you provide. Plus, rather than focusing on the negatives, you should also accentuate the positives. Will the price increases lead to higher quality goods and services? Better customer service? More special offers and discounts for loyal members? For every negative, be creative and find a silver lining. After all, you can’t just announce a price rise without giving something back in return.
3. Inform customers beforehand
You should also allow a reasonable time frame in which to implement these changes before simply going ahead and giving your customers a nasty surprise when they arrive. In order to inform your customers early you could post on social media, make announcements on your website, send out emails, place notes inside your menus or bring it up with customers whilst they’re in-store. The other reason for this is that it’ll give you ample opportunity to roll out these changes in an orderly manner. For example, staff will need to be informed and trained in advance, helping avoid human error. If you’re using an EPOS (Electronic Point Of Sale) system, you’ll also need to allow time to fully update the system.
4. Ask customers for their feedback
If you’re adamant about raising the price of your goods or services, you should engage how your customers will feel about these changes. Feedback on any proposed changes may also help you predict at what point they would affect the loyalty of your customers. To achieve this, carry out surveys both in-store and online. The other benefit to this is that it will show customers that you value their business and care about their opinions.
5. Offer other pricing options
Finally, consider what pricing options you can provide to make your goods and services more affordable. Could you offer different sized portions on your menus? Perhaps you could charge varying rates during different times of the day? Or are you able to divide your services and charge separately for each individual aspect, allowing your customers to pick and choose according to the size of their budgets? Giving customer greater flexibility can be a great way of retaining their business and perhaps even encouraging them to spend more.
Looking to invest in your business instead?
Although raising your prices may seem like an appropriate response to falling profits, you need to thoroughly investigate and assess all of the factors which may be responsible. On closer inspection, you may find the cause of your business’ issues might require more decisive action. Besides, raising prices should only be considered as a last resort. If the problem is being caused by ageing equipment, dated aesthetics or poor quality goods and services, a lack of investment could be the issue. However, thanks to the Alternative Finance Industry, there are more funding opportunities available to you than ever before. As such, there’s no reason why you should deny your business the funds it needs to succeed. So before passing the burden on to your customers and risking their loyalty, apply for Business Finance today or find out more with Rangewell.
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