Rising inflation means prices are rising and your business’s costs are also increasing. So, maybe it’s time to increase your prices?
Earlier this year, we looked at the cost of living crisis and what you could do to help manage rising prices. With energy prices fuelling inflation, keeping a tight rein on costs is necessary.
But as well as managing your cash flow, raising prices is also key to helping your business survive. It is, however, one of the most difficult choices to make, and many business owners fear increasing prices means losing customers.
So, how do you tell your customers you are increasing prices? Here are our tips.
How to tell customers you are raising prices
Before we look more in-depth, remember, you’re not alone! Businesses of all sizes are having to increase prices as inflation rises, and you can’t absorb all the costs. We are sure that many of your company’s suppliers have put their prices up, so it’s understandable if your prices rise.
Indeed, a survey earlier in the year by the British Chambers of Commerce found 73% of UK firms were planning on raising prices. While it is tough to have to pass on costs, it’s usually a necessary evil.
1. See value from your customer’s viewpoint
It doesn’t matter why you’re raising prices, the key is in communicating to clients and customers the added value your business brings. This helps them see the move in a positive way.
Most will understand that your costs have increased, but remember to reinforce what you offer. This makes sense if you have added new services or expanded what you are offering over the years. If you’ve hired new people, explain that in order to secure the best people, increasing wages mean you have to pay the best to secure the best.
Don’t simply say ‘prices are going up’, focus on the positives.
2. Don’t over-apologise
Again, the key is in explaining the reasons for your decision. It’s OK to say ‘you are sorry to have to increase prices’ once, but don’t overdo it. Apologising too often makes it sound like you don’t believe you’re giving a good enough service.
Saying that in line with your costs increasing, you have reviewed your prices is fine. People will understand that, but saying ‘sorry’ in a long-winded email that goes into too much detail can give the impression you’re not too sure about the extra cost.
3. Be clear
Telling your clients and customers that prices are rising is difficult, but you need to be confident and clear. Explain clearly:
• When the increases take place.
• The exact price that will be reflected in their next bill.
• What the situation is with work currently being carried out.
If you have a business with a team, put together a FAQ document so they can answer any questions. It’s best if everyone sings from the same hymn sheet.
4. Talk to customers
Rather than sending a round-robin email or letter, take time to contact your customers and clients. It’s better to chat and explain in person than via anonymous communication. This also gives them the chance to ask you personally any questions they have. It reassures them that you care about them and the effect this rise has on them.
Follow up with a written response that outlines all the key details for them to review.
5. Give plenty of notice
Contacting clients a week or two before rises will leave a bitter taste and could lose you business. Instead, try to give a few months’ notice before increasing prices. This gives clients time to make the necessary steps required to find extra funds.
Make sure you send a reminder a month before the increases take place to remind them.
As ever in business, balancing your income and outgoings is never easy, especially when prices are rising rapidly. But by being honest with customers and clients, you’re more likely to keep them.
For more information about dealing with business finances, contact us today using the form below.