So, How Do You Tell Them?
So, how do you tell customers that they’ll have to pay more for your products or services? If your customers are valuable to you ... use these steps when you must increase your costs and show your customers that they really do matter to you. Below are real-life tactics used by senior professionals who've faced this dilemma.
- Define What They Gain
Explain the reasons why the increase benefits them: i.e.: added content, additional service, added support, new products or services. Then tell them that your low-cost products are being phased out
- Show Your Worth - Increase Perceived Value
Make it a point to reinforce that even with the price increase, your product or service is still a great deal. By adding value to your product - making it worth more to the consumer - helps raise prices without customer backlash. Highlight all added features such as product or service improvement and growing feature/functionality options.
- Play Favorites
It’s important to let your biggest clients and customers know about the increase early to soften the blow. You sure don't want your next invoice to arrive without prior notice. And they sure don't want to read about it in the news. Informing the price increase news should never be relegated by email or a salesperson. They should be communicated from the company owner or senior head (president) via a personal stand-alone e-card or letter.
- Be flexible.
Price increases can be softened if you offer an option to save money. Let customers focus on value by giving them a second option. Consumers appreciate choices, so establish new options such as "bronze", “silver” or “gold” packages with appropriate appeal is recommended. It beats mere across-the-board price hikes.
- Offer Incentives.
Smart business owners often suggest to customers that rather than an increase in the "rate" of the product or service, that they agree to a 'contract basis' or 'retainer' approach, if they agree to a longer-term commitment. This approach ensures a set revenue stream for the company and the client always gets the better deal because their scope of services usually expands.
- Thank Your Customers
Express appreciation that they have selected your company as a trusted vendor.
- Over-Deliver First
Be sure you can demonstrate that the value you provide is increasing more than the price. This way, customers know that their decision to stay with your firm is the right one!
- Explain But Don't Apologize
Think of it this way: as your business develops, your products or services should be worth more. Briefly explain how the higher price allows you to better serve them. Then move on. If you've proven your worth, then they won't walk away.
Remember, there is a CAP on the frequency of price increases and also the amount of increase. Some companies just do it with no notice (gas stations, restaurants, grocery stores). The point is that you need to make a price increase decision with a clear head, weighing both your perspective and your customers perspective too. So, before you write that letter, be prepared to RUMBLE!