So, you want to raise your prices. Sounds easy, right? Unfortunately, the reality of the situation is a bit different. There are several factors and complex layers to consider if you want to raise your prices, and you'll likely be burdened with numerous anxiety-inducing questions along the way. How much is too much? Won’t my customers get angry? How do I justify it? Is raising my prices going to kill my business? How the heck am I supposed to do this?
We get it, raising your prices is a difficult process riddled with pitfalls that could hurt your business, which is why we’ve created this comprehensive guide. Our goal is that by the end of this blog, you'll feel fully prepared to *safely* raise your prices without angering your customers.
Raising your prices is not something you can do on a whim. You'll need to think long and hard about finding the perfect timing for a fee increase. The big thing to consider is resistance. Is this a time when you'll receive a lot of push-back from customers? If so, drop the idea until a later date.
So what does that mean for you as a field service owner? Think about the times of the year you are the busiest. If you operate an HVAC business, you'll probably be booming in mid-July when temperatures reach their peak. That would be a great time to enforce a price increase. Customers will be more willing to shell out cash for an AC repair so their home doesn't feel like the inside of a volcano.
We recommend keeping an eye out for green flags so you know when the environment is right for a price hike. If your customers are flocking to your business like a Black Friday sale on flat-screen TVs, then you know you have the popularity and reputation to charge a little more. This is especially true if you get feedback from customers saying you were cheaper than the competition. Read the signs, and it will be easy to know when the time is right.
OK, you've decided when to change your prices. But now comes the super important question of how much? It'd be great if you could quadruple your fees and be done with it, but even the best businesses can't get away with that. It would be too much of a shock to customers, and even your most loyal fans would probably fly the coup. You want them to think they are getting a good value when they choose you.
Instead, we recommend making a gradual shift in prices so it's less noticeable. If you're lucky, your customers might not even realize they're being charged a little more for the same services as before. You might even want to distract your customers by offering special deals or discounts while also adding in a service fee. You know how birds are attracted to shiny objects? Customers can sometimes be the same way (but don't tell them that). They'll be so blinded by the awesome deal that they won't notice the bill actually came out to more in the end.
If those solutions don't sound like they'll work for you, consider bundling services and products that help customers save money compared to if they were to buy these things separately. You may even want to consider upping the quality of your products or services so customers feel like the price increase is justified.
Never go into a price increase without some sort of plan. Be ready for backlash, as it's inevitable that you'll receive some complaints once customers realize what's up. Be sure to have a statement ready so when those negative online reviews come in, you can copy and paste it without letting your emotions run wild.
You'll also want a contingency plan if things really do go south and you start losing business. Rather than revert back to your old prices to try to repair the damage, you may want to forge ahead and pursue a new customer base. It all depends on the services you provide and where you are located. Trying to sell luxury smart toilets in a lower-income ZIP code might not fly so well.
Finally, think about when your next price increase will happen. Obviously, this isn't something you'll want to keep doing every few months, so make sure your current price increase will be enough to sustain you for a while. Even though it might be easier to increase your services by a few dollars, if you are providing a value that's worth more than that, don't be afraid to go higher.
So let's review, shall we? We've defined three main factors you can use to increase your prices without having your customers die of a heart attack. One of the most important things is timing. This might be thinking about the times when your customers will be less likely to notice increases, or it could mean waiting until the time when your business is a hot commodity.
Next, you need to think about the value you're providing with this price increase. Are there ways you can conceal your new prices so customers don't realize what's happening? It sounds a bit tricky, but it can keep you from losing customers who love saving big.
Finally, it's important to have a plan in place so you always know what the next step is. Winging it is fine when you leave your grocery list at home, but not so much when it comes to ensuring the success of your business. Have a written guide for how to respond to criticism as well as a timeline for increasing prices in the future!
When you put it all together... you'll have a surefire way of increasing profits without sacrificing your most loyal customers.