When we talk about prices, it is a very sensitive question for each entrepreneur. Higher prices mean more profit, but on the other side, it’s also dangerous to lose some of your current customers. So, how can you increase price rates without losing customers?
Sometimes as an entrepreneur, you are forced to increase your price. Your market dictates those forces, and they are highly influential on your cost structures.
However, the question is how you can increase your prices with the lowest pain level for your customers.
I’ve tried all of these techniques, and each of them is specific for different situations or different reasons for increasing price. Sometimes, I have pressure from my suppliers because they have increased their prices, which directly impacts my cost structure. In such a situation, I don’t have some possibilities for trying different tactics. I need to make my prices according to the newly appearing situation.
Sometimes I can have much more time to make analyses and tests to decide about the increasing price, but sometimes I need to add more value to my offer if I want to increase my price.
It is important to know that different reasons for increasing prices will need different ways to raise your prices.
What are the most common techniques you can use to increase price rates?
#1 Gradual Increase Price Rates
Something broadly used by entrepreneurs is the gradual rise of the price, which will not be shocking for your customers. You continue to raise your price until you come to the normal or wanted one. When using this technique, the biggest challenge is knowing when the prices meet the customer’s resistance. You need to follow their behavior.
For example, you raise your price by 5%, and nothing happened. Your customers continue to buy with the same quantity level as before. After some period of time when you are sure that the first rising didn’t change customer’s behavior, you raise your price again by 5%. And again, nothing happened. The sale is the same. You don’t receive complaints. After some time, you raise your price by 5% again, but you find that your sales start dropping after that. That’s a sign which tells you to stop and return your price on the previous rising level.
#2 Test, Then Increase Price Rates
This is the second way that you can use to increase your price. If you want to be sure that the new price will be OK for your customers, test that hypothesis. Firstly, you need to find how much they are prepared to pay you. You can find the answer if you ask them, or you can find that with the split testing, which means sending the same offer with different prices to a different sample size of your customers.
This technique means that you don’t raise your price before the conclusions from testing that will tell you the best price for your products and services.
You can use this technique if you are not sure about your current price and you think they are underestimated.
#3 Add Value
Sometimes, if you want to increase your price to improve your business’s bottom line or increase profitability, you can use the technique called adding value. If you add additional value to your offer, that will be fair compensation of the price difference that you will ask for your products and services, and your customers can appreciate that and continue to buy from your business.
You can add new features, additional service components, bonuses, guarantees, shipping, and handling…
#4 Just Do It Technique
The last technique is called the “just do it” technique that means you increase your price at the level it should be. What it should be is what you think your products and services currently worth.
Sometimes you will be forced to increase your price if you want to stay in business. In such a situation, there are not possibilities for thinking or testing. You need to increase your price and period.
However, you can do one thing when you use this technique to show proof about the value of your offer.
As you can see, you can use more different ways or techniques when you plan on raising your prices. But, more important is that in different situations, or for different reasons, there will be a need for a different technique. Find what is most appropriate for each situation and employ it.
What is your experience when you raise your prices? Is there any other technique that you use?