In our last blog, we made the case for why resisting price increases at all costs can be detrimental to your business. Yes, everyone knows there are risks in raising prices, especially at a time when customers are feeling the pinch of high inflation.
But, as we argued, businesses are affected by these inflationary pressures, too. If you want to protect your margins, the only alternative to increasing prices is cutting costs. If you view raising prices as a last resort, you can end up cutting too deep and undermine your business’s ability to provide a quality service.
By and large, customers would rather pay a little more for a top quality service than see quality deteriorate while paying the same price.
So there is very definitely a right time to consider price increases – when your business remains strong and resilient, when the quality of service you are providing is at its peak, when you have a solid base of loyal, satisfied customers.
But equally, there is a right and a wrong way to go about changing your prices. And the wrong way definitely involves not being clear and up front with your customers that prices are going up.
Grasping the nettle
There’s no mystery as to why companies balk at announcing price increases. There is a tendency for some customers, at least, to be angry. Angry voices often shout the loudest on social media. Before you know it, you’re being accused of profiteering by a small but animated online mob. That’s not great for brand image or reputation.
But think about it. Are these same people going to be any less angry if you try to slip through price increases on the quiet? Not likely. Nothing will annoy customers more than unexpectedly being charged more, and with some justification. It’s disrespectful, sneaky and betrays trust.
Push through price rises unannounced and you won’t just anger the vocal minority. You will also alienate the quieter, more loyal majority who form the core of your customer base. And that spells real danger for your brand.
Call it grasping the nettle. Call it doing the grown-up thing. But being honest and clear with your customers about intended price rises is the only sensible approach. Yes, some people might not be enraptured by the news. But your job is to quell those flames. And if a few complaints are heard, trust that the flames won’t spread too far, because the majority of customers will appreciate and understand your explanation.
There are a few things you can do to help this along:
- Contact customers directly. Don’t rely on an impersonal notice posted on your website. People might miss it. Contacting customers directly by email or letter to announce and explain any price changes shows you value your customers and adds a personal touch.
- Call it what it is. People don’t like slippery corporate speak. Talking about ‘price adjustments’ or ‘updates’ comes across as patronising. They know what is happening, so be honest – you’re raising prices.
- Explain your reasons fully and clearly. This is the real crux of communicating price increases. Most customers will accept them if they are offered a clear and reasonable explanation. Explain that your business costs are going up. Explain that you are having to pay considerably more for products and raw materials. Explain that, to protect the people in your company who deliver the high quality of service your customers enjoy, you need to raise their pay in line with inflation. Whatever it is, however soaring prices are affecting your business, be open and honest about it. That alone will earn customers’ respect as well as soften the blow of the price rise.
- Focus on the customer. While it’s important to be open about the business reasons behind your decision to raise prices, you don’t want to make it all about you. Customers will be turned off if all they hear is me, me, me. Instead, turn it around and focus on them. You are putting prices up to protect the quality of product and service they are used to. You want to be able to continue to invest in improving the customer experience.
At the root of it all, build your explanation around value to the customer – yes, prices are going up, but in return, customers can expect better-than-ever service and experience. Be specific about how the extra revenue will be used to deliver even better value to your customers. If you have growth and investment plans, be open about them. Set out your vision for what your customers can expect from your brand in 12 months, two years’, five years’ time.
