Price Increase Planning: 4 Ways to Raise Prices without Losing Sales Volume or Customers
Late 2016, there was an interesting and unforgettable pricing row between supermarket giant Tesco and leading consumer goods company Unilever.
Unilever wanted to raise the prices of its goods by 10%, due to the high cost of imports caused by a weak sterling. However, Tesco refused arguing that Unilever
“…had been all too happy to take the benefits when the pound was strong and not pass the savings onto the customer but was now trying to recoup costs as soon as the situation shifted.”
During the spat, Unilever stopped all deliveries to Tesco, while the retail giant stopped offering Unilever’s products on its websites.
Luckily for loyal customers of the two brands, the two feuding parties were able to reach an undisclosed concession within 24 hours and things went back to normal.
If you’re a small business owner trying to raise your price, it’s easy to predict you will meet with great resistance from your customers like Unilever.
But do you know that there are pricing strategies and solution that could make a price increment a win-win for you and your customers?
Today, we share with you 4 ways to increase your prices with minimal loss of customers.
We also show you ways we the team at Consultant bvba can help your business find the most effective pricing strategy that would both increase your profitability and keep your customers satisfied.
4 Ways to Effectively Increase Prices
Inform Customers Beforehand
In most cases, it doesn’t work when you spring new higher prices on your customers without letting them know in advance.
Going this route may make you lose customers who would have stayed if only they knew about your price increase beforehand and had factored that into their budget.
Before reviewing your pricing structure, take the time to communicate the increment to all your customers – whether by phone, email, or whatever way works best in your sector.
Be transparent and justify why you need more money. Make them see how your product has increased in value compared to previous times when you had a commercial relationship.
While these may not make work with all existing customers, it should at least make a larger percentage of your customers react with greater understanding.
If Possible Give Existing Customers Time to Adjust
Another tactic that might work to retain old customers is giving them a period of time before the new pricing takes effect for them.
This kind of makes them feel special and help them better adjust than when they have to pay immediately at the next purchase.
Add More Visible, Valuable Features
Adding a valuable feature(s) to your product or service gives you an authentic reason to raise your prices. Older customers or clients will recognize that your offering has evolved (and for their greater good).
With growing features and product evolution, your solution is worth far more than before, hence your prices will reflect that.
Provide a Lower-Priced Alternative
A great way to shift customers’ focus to the additional value of the new offering is to offer a lower priced option.
Two options with different pricing will make a customer consider more intently the value your new product brings instead of the raised price. To make things even super attractive to customers, you can price the older product with lesser features cheaper than the previous price.
How We Can Help You Increase Your Price & Still Have Better Sales and Happier Customers
When it comes to implementing a new pricing scheme, it pays to have knowledgeable partners that would help you navigate the process with little to no pain.
At The Consultants bvba, we use both quantitative and qualitative methods to help customers unlock pricing opportunities and develop the best pricing strategies.
We work by first identifying the needs on the ground, then working hand in hand with the client; we set out to build the people, tools, and systems to achieve your end goal.
Other ways we help clients build capabilities for better pricing and sustainable profitability are:
- With the aid of relevant data, we create tools to uncover pricing opportunities at different levels and discover the actual value of products in each customer segment.
- We also help to develop an effective budget, price increase simulation, and EBITDA recovery.
- After an in-depth study of the competitive pressures affecting your market, we can design market strategies that could sustain the long-term growth of your company.
- We understand that the best tool is rendered ineffective when the people as well as the processes that need it can’t assess its full functions.
With this in mind, we diligently train personnel on the front lines and also connect necessary business processes to pricing tools for improved results.
Summary
No matter the technique you use, always remember that your EBITDA, net margin and the value your customers are often linked.
As a result, make sure to be customer centric whenever planning a price increase especially in 2021.
Baydhir Badjoko
MD, The Consultants bvba
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4 Ways to Increase Prices without losing volume