There are only a handful of ways to grow your business – broaden your target market, expand your offering or raise your rates. Often business owners shy away from the last option, which runs the risk of alienating existing customers or keeping prospects at bay. But in truth, to stay competitive and offset rising costs, in most lines of business, your rates will need to grow. This blog post will explore how you can raise your prices, but also mitigate the risks of doing so.
Honesty is the best policy
A frank announcement about a rate increase will usually do the trick. Don’t sugar coat it, definitely don’t lie about it and don’t avoid addressing it. Your customers are smarter than that, and will appreciate a direct and candid disclosure. Transparency about pricing is usually the best policy.
Lifting your fees without providing any explanation is a bad move. Loyal customers deserve an explanation, and often by providing one, you will offset any feeling of anger or frustration on their part. If your own expenses are growing, or if you are making investments in new product lines, provide that context so that loyal customers can understand the reasoning behind the hike. If you are raising fees, for instance, to take your family on a luxury vacation to Hawaii, you should probably spin it a different way.
Enhance the value of your offering
If you are going to raise your fees, you might want to consider ways that you can add value to your offering, without increasing the cost. Perhaps you can extend a warranty, or offer a discount on future purchases. Think of how you can represent that while they will be paying more, customers will also be deriving additional benefit.
Never, ever take your customers for granted. They can almost always take their business elsewhere, so thanking them for their continued support will go a long way in making them feel appreciated. As you raise your rates, consider sending a small token of appreciation to your most loyal customers, alerting them of the increase. A gift certificate, a box of chocolates, or even just a handwritten thank you card can do the trick.
Consider the competition
It is important to survey the competitive landscape and understand how your fees compare. If you are in the middle of the spectrum, for instance, you might want to point out to customers that while your rates have increased, you are still very reasonably priced compared to other comparable businesses. If you are at the higher end of the spectrum, you’ll want to be sure you understand (and communicate) how you differentiate from the competition so your customers can have that in mind as they comparison shop.
Offer a free trial
Often customers will feel better about paying more if they know they are getting something for free up front. Think about whether or not there is opportunity to mitigate any fallout over a fee increase with an associated freebie. This approach may even help grow your customer base and drive interest in your product/service.
If you are thinking about raising your rates but you are concerned about the impact to your business, contact Miller Bernstein today for help.