The new year is a great time to make resolutions about your business, such as vowing to expand your customer base or launching new products and services. Additionally, the beginning of the year is an ideal time for raising prices to keep up with inflation and ensure your business continues to grow. However, instituting a price hike without angering customers can be challenging, and the majority of self-employed professionals actually charge less than they truly deserve.
While it’s natural to be wary about pricing issues, the fact is that undervaluing your products and services will only hurt your business in the end. Fortunately, there are steps you can take to avoid losing clients when you raise your fees. Here are some tips for keeping your business in the black without sacrificing customer satisfaction.
Nobody likes hearing that a supplier is raising his or her prices. If you’re thinking of upping your rates in 2015, you may want to consider increasing your performance in the days and weeks leading up to the change.
Not only does over-delivering on goods let clients know how essential you are to their daily operations, but it also helps minimize tensions. Keep up the extra effort during the crossover time so your customers will know their money is being well spent.
Charge New Clients More
If you’ve been working with your current clients for years at the same price point, it can be difficult to bring up the topic of a rate increase. To avoid losing loyal customers to the competition, you may want to consider restricting your price hikes to new clients. Doing this allows you to increase business profits without risking the strong customer relationships you’ve worked so hard to build. If new customers respond well to the rate increase, you can always introduce them to existing clients at a later date.
Still desperate to increase your revenue? Consider using an 80/20 evaluation to identify those customers who are most profitable to your business. You can maintain rate levels for the highest 20% of your client base while upping prices for the 80% that is less lucrative.
Upsell Existing Clients
Savvy business owners know that success requires increasing sales on the products and services that are most profitable. To increase profits without alienating current clients, consider cross-selling people on your more lucrative services.
For example, a freelance writer could approach her steady blogging client with a website optimization proposal. Similarly, someone who performs home-cleaning services could expand the business offerings to include handyman services or organizational help. After all, it’s easier to upsell an existing client than it is to find a new one that knows nothing of your skill and reliability.
Give Sufficient Notice
It’s no secret that clients are often less than thrilled to learn that a business’ rates are on the rise. However, your customers will be even angrier if you spring the price change on them with little to no notice. To engender customers’ goodwill, provide them with a few weeks’ notice before a rate change goes into effect. Not only does advanced warning allow customers to prepare for the greater financial burden, but it also lets them put the price change out of their minds for a while. After all, people worry less about future developments than those that are happening now.
Once the price change does go into effect, it’s important to make yourself available for questions and comments. Alert your customer service and salespeople to the price bump, and prepare to deal with a little bit of negative feedback in the short term.
Asking for more money can be unpleasant, and business owners are often tempted to apologize for inconveniencing their clients and customers. However, the best way to keep your clients loyal is to approach any change in pricing with confidence. After all, you are providing people with a valuable service and deserve to be paid appropriately for your efforts.
While apologizing for a price bump can make you appear weak, you shouldn’t hesitate to explain the reasons for the increase. Along with emphasizing your experience and dependability, let clients know about any additional qualifications or training you’ve acquired in recent years. The goal is to convey your skills in a way that lets clients know you’re worth more than the bump in price.
Raise Your Prices With Confidence
Pricing conversations can be awkward for everyone involved. However, it’s important to remember that your business is your livelihood, and keeping your prices down will eventually affect your quality of service. In the end, you may have no choice but to close your doors. By maintaining a competitive pricing structure and continuing to deliver top-notch service, you can give your small business the best shot at success.