Cash flow got you down? A price rise on the cards? You’re not the only business owner currently grappling with sending a price increase notice. Off the back of rising inflation and other economic pressures of late, costs are front of mind for small business owners.
Before you increase your prices, have a look for other ways to cover your rising costs. Take time to review your business expenses, which include things such as insurance, your suppliers, products you’re offering and your EFTPOS provider.
While increasing your prices can be daunting, it’s also essential for business growth and, in some cases, keeping the business afloat. Most customers don’t expect the costs of the products they buy to stay the same forever. But how do you maintain your customer loyalty in the midst of a price rise? We share four tips on how to tell your customers about a price increase without sacrificing their loyalty.
Clear and direct communication will reduce the potential for any misunderstanding or frustration about your price increase notice. You don’t need to apologise that you’re raising your prices. If you do, it can lead to confusion and mistrust. That’s the last thing you want.
When communicating, get to the point. Justify the price increase by explaining the value you’ll add to your customers’ future experiences.
Be honest with your customers about why you’re increasing your prices so they can understand the rationale behind the decision.
Some common reasons for a price increase notice include:
This helps make it clear to your customers that you’re simply responding to the market environment and not just chasing increased profits at their expense.
Don’t spring a price increase notice on your customers overnight. Instead, provide them with plenty of notice, whether this is weeks, months or even a year. Depending on the value of the increase, your customers may need time to factor the higher price into their own budgets.
A good time to consider raising prices is at the beginning of the financial year or after a sales period (EOFY sales or December/January sales). Take the time to review your pricing and profit margins regularly, increasing prices slowly over time rather than in one big bang if possible.
Your timing is one thing, but where you deliver your price increase notice is another. Will you send a personalised letter? Or an email? Or make the announcement on social media? Wherever you choose to do it – based on what you think will be best for your customers – remember that you’re a human communicating to other humans.
Show the human side of your business by offering to answer any customer questions directly. And, consider having a conversation with your customers about the price rise. This will show them a sense of appreciation, which can help you build relationships with your customer base.
If you offer your customers an experience they value, they’re less likely to worry about a price increase. When you communicate the price increase notice, focus on the benefits of your service or emphasise product quality and improvements. This helps to demonstrate the value your customer will gain after the price increase.
Talk to your customers and ask for their feedback to understand their expectations around the prices they’re willing to pay for your products or services. If there’s no pushback about the price increase from your customers, you might have been undervaluing your business to begin with.
Beyond price increases, look at ways to save costs in your business. Such as Smartpay Zero Cost™ EFTPOS, a solution that allows you to pass your transaction fees onto your customers. You can take your EFTPOS bill and reduce it to $0!
Keen to save with Smartpay?
Before you send your price increase notice, explore different ways to save. Get in touch with the team at Smartpay to discuss Smartpay Zero Cost™ EFTPOS for your business.
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