Price is one of the most sensitive points of any business. The rate that you charge customers for goods and services is a delicate proposition as you want to charge what you’re worth, but still have enough business to earn what you need to live.
If you’ve been running the numbers and know you need to raise your rates at the end of the year, how can you do it successfully? There are three key points of approach that can help you move ahead with your new rates and still keep a full calendar.
1. Give Notice
One key tip for easing customers into a new pricing structure is to eliminate the element of surprise. Springing a rate change on a client will elicit the greatest negative reaction, but breaking the news well before a change will help give your clients time to adjust and plan.
After all, at year end everyone is planning out their finances for the year ahead, and with sufficient notice it will be easier for your clients to build their budgets around your new rates.
Notice can also allow clients to buy now at the current rate, or to book projects ahead of your pricing change. If you don’t want to allow this, that’s fine, but for some pricing moves allowing pre-booking during the notice period before a rate change can have the same business boosting effect as having a sale.
2. Keep Your Wording Neutral
You know you’re raising your prices, and your customers know you are raising your prices. This doesn’t mean you need to run out and scream it in the bluntest manner possible, or imply that you’re going to be unaffordable in the future. Instead, adopt a relatively professional and neutral tone as you share the news about your new price points.
As you lay out your new rate details for your clients (including the date they start to apply) remember that the more neutral the wording, the better. It’s not introducing a “higher rate,” but rather introducing a “new rate.” Your price points aren’t “increasing,” but rather “moving in line with market conditions.” Try out multiple drafts so that you feel comfortable with the blend of your brand personality and the professionally neutral tone of the price change.
3. Reiterate Your Value Proposition
A change in your prices is an opportunity for you to reiterate your value proposition to your customer base. You know why you’re worth your fees . . . but when was the last time you reminded your clients of all the specific benefits of partnership with you?
Don’t be afraid to use specifics. If your prices are based on traffic volumes, share some of your numbers and trends. Where you have direct examples, put the spotlight on them. Work to end your communication with data that gets your customers focused on all of the ways that what you do helps them, builds them up, and makes them money.
With adequate notice, a professional approach, and a strong statement of value, it is simple to announce a year-end price hike. Your customers will know what to expect, and complaints can be kept to a minimum. There will always be someone who doesn’t like something about what you’re doing, but with a strategic approach you can ensure that your core tribe of clients is informed, planning for you, and looking forward to what you will achieve together.
8 comments
Hello Brendan,
Adopting a neutral tone and explaining your customer that the prices are not actually increasing because you are greedy is just because you want to keep your service running with at the highest quality.
Nothing is more annoying then getting an email where people are just telling you that they will increase their prices from the next time you will be billed.
At the beginning of 2011 I’mgoing to stop under-charging myself and set reasonable prices for my services. I find it very difficult though deciding how much I’m worth.
The best place to start is to examine what your competitors are charging and compare your services with theirs. It is a challenge to price something so that you get what it’s worth and you get enough business. Price comparison is just too easy online.
Sometimes one of the best things you can do is to be honest with your clients, especially if this is a cost that you can connect with your clients and show to them that it is a necessary thing to increase the price, most clients will understand in my opinion if you are able to show them.
Till then,
Jean
Although it would seem an irony, even a paradox, but Honesty is still the best policy in business!
Some regular customer never mind your price hike , but one who come from any referral media kept always old rates in mind here we using an offer which help us to calculate how much price hike can effect by regular customer.
You do have to be careful with any price increases, especially online. If you set your pricing too high, many people will just buy from a cheaper competitor. So be sure your pricing is in line with the true value of what you’re offering. Also be sure to check competitor pricing beforehand. You don’t want to price yourself right out of the market.
It’s very important to break the news of price increase gently and be willing to offer concessions if needed to ease the transition also. The other day, my favorite Chinese restaurant sent me extra big portions of food and then I realized the prices had gone up but I wasn’t as angry about it due to the extra food. 🙂