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Read More »5 Powerful Strategies to Increase Prices Without Losing Customers
If your expenses are rising faster than your sales revenue, you are not alone!
Many business owners feel the need to raise their prices, but are fearful of losing customers.
If this is you, or you know someone in this situation, you are at the right place.
You can increase prices without losing customers these 5 ways: 1. Make it a positive opportunity for your business, 2. Communicate price increases with strategic sales specials, 3. Create more value for the customer, 4. Provide more options at different price points, 5. Become really good at using the word “Free” in your marketing.
In this article we are going to walk you through some simple, proven strategies you can use to increase prices without losing customers. In fact, with these strategies, you will find that you might gain customers, too!
Let’s get started!
How to Increase Prices Without Losing Customers (Powerful)
Here are five proven strategies to increase your prices without losing customers. Any one of these could improve your prices and value delivered to your customers. But if you implement two of these strategies, let alone all five, you will be leap years ahead of your competition.
1. Make it a positive opportunity for your business to optimize your pricing structure
Figuring out how to raise prices without losing customers may be the wrong goal. The big goal should be, how to find the optimal price point that attracts the most customers. After all, the job of marketing is to: 1) Gain a customer, and 2) Keep a customer.
And part of marketing’s job is to find the optimal price point that accomplishes both of these main tasks.
Yes, it’s true that customers are sensitive to price increases. And some customers may not stick with you if you raise your prices. But, this is where you have a decision to make.
What is the goal of your pricing strategy?
- Is it to make as much sales revenue as possible?
- Are you trying to capture as much net income as possible from every sale?
- Or is it to acquire as many customers as possible because the lifetime net value of a customer is very high?
- Is it to prevent competitors from gaining market share?
- Or are you looking to achieve a desired return on investment?
Get clear about your pricing strategy and then you can identify what you are trying to accomplish.
Only then can you determine if the increase in net profit earned from an increase in sales is worth the possible loss of a customer.
For excellent tutorials on how to optimize your pricing strategy, visit:
- What are the goals of your pricing strategy?
- 3 Sneaky “Psychological Pricing Tricks” Businesses use to Increase Sales
2. Communicate price increases with strategic sales specials
Customers love to be entertained. And they love quality communications.
You can use this as an opportunity to improve your communication systems and test how your customers will respond to not just a price increase, but also a variety of sales specials.
Start with email communications.
If you currently send 1 email a year to your house list, start sending far more. Start doing sales specials, tell them your main product is going to increase in price soon. You’ll probably see a bump in sales immediately.
Add more value, do product bundles, add more quality information. Make it more fun and educational. There isn't a business on the planet that can’t benefit from this strategy.
Then integrate direct mail to the top 5% of your list.
Learn how to use email and direct mail here:
3. Create more value for the customer
Whatever the reason for increasing your prices, whether cost push inflation or demand pull inflation, the customer ultimately has to pay more for the product or service.
Your job is to create and communicate value.
Now is the time to remind your customers of the value they get from your product. And if you are increasing prices, you can also find creative ways to provide more value in exchange for the increased price.
Sell it and make it positive. Combine the price increase with a limited time special. Add value. Give some freebies away. Make it fun and engaging to be a customer.
For example, would you want to do business with a company that's just "there," with no unique benefit or no incredible price reductions or wide selection, void of excellent service or even a guarantee?
Probably not, and neither does your customer. If you position your product this way, you don’t deserve to keep your customers when you need to raise prices.
Or, would you prefer to work with a company that offers you the widest selection in the city, country, or world? Or, a company that charges a fraction of what other competitors charge? Or, on the other hand, one that sells the "Rolls Royce" of the industry's products?
Can you see what a nice difference building the value proposition in your offer makes in establishing your sales position to the customer?
4. Provide more options at different price points
Regular customers are used to paying certain prices for specific products.
All things being equal, a sudden price increase with minimal communication and no extra value added will obviously make your customers unhappy.
You can be better than this.
First, get creative to not just retain the current customers but in many cases your customers could be happy to have the option to pay more. You can do this by innovating new products and solutions that you can offer at the previous price and even higher price points.
The food business has been doing this for years. For example, the biggest food companies will routinely gain customers and market share by selling a 10-ounce bag, and then routinely replace this product with an 8-ounce bag at the same retail price and then create a bundle of 8, 4-ounce bags.
This provides more choices to their customers, while at the same time increasing prices.
To create a breakthrough in your business and see regular growth through innovation, you are invited to review this article:
How to make a breakthrough in business (+Checklist)
5. Become really good at using the word “Free” in your marketing
McDonald’s is a master of many things in business. Not just in franchising, food, real estate, advertising and technology, but also in using the word free in their marketing.
Recently, we reviewed McDonalds.com and their most valuable piece of real estate: what they communicate above the fold.
Did you know they used the word “Free” 5 times in this space?
You can do the same in your offers to gain and keep customers, regardless of your price point.
In fact, the word free is one of the most powerful words in business primarily because of the emotional reaction it activates. People love free gifts because:
- Free offers a perception of zero to low risks
- Free implies a great bargain
- Free removes the barrier to entry, e.g., trial
- It creates an added value to a product/service
For example, if you are offering a facial treatment service, you could opt to give clients free at-home sheet masks. Or, if you just started a local sandwich shop, you could blanket the surrounding area of people in your target market with a free coupon valid for a free sandwich.
In both of these cases, the businesses are using “free” in their marketing strategies. And price point won’t matter, as long as your product or service is stellar.
Go here for more information on how you can use FREE in your marketing.
The Bottom Line
You absolutely can increase prices without losing customers by increasing your communication skills, providing more value, and being creative.
References
http://gsl-archive.mit.edu/media/programs/mexico-summer-2015/materials/is_it_time_to_rethink_your_pricing_strategy.pdf
http://www.truevaluemetrics.org/DBpdfs/Metrics/McKinsey/Setting-value-not-price-McKinsey-and-Company.pdf
