Are you struggling with rising costs? Like many businesses around the country, you are probably struggling with several challenges:
- raw material shortages
- supply chain issues
- wage inflation
- recruitment challenges
- rising energy prices
- increasing overheads
- and reducing margins.
In the face of such daunting challenges, it can be scary to think about increasing your prices.
What if you upset your customers? What if it affects your sales pipeline? How will your competitors react?
Fear is the number one reason that stops most people from increasing their prices.
Yet it doesn’t take too much effort to put a sensible plan together that will enable you to increase your prices in a sustainable way, without upsetting your customers.
Here are 5 practical steps you can take.
- Give plenty of notice.
Ensure you give your customers at least 30 days’ notice of any impending price change so they can plan accordingly. If you want to increase your prices from 1 January 2023, you need to notify your customers by the end of November at the latest, so work back from there.
- Know your unit costs.
Make sure you understand how your unit costs have changed over the last year, and what might happen to them in the next 12 months. Incorporate any likely future increase in unit costs into your price increase plan.
- Understand the bottom-line impact.
Is it such a bad outcome if you were to lose a few customers because of a price increase? If you have 100 customers paying £25.00 (per product) and you increase the price to £27.00 and lose 3 customers, you will be better off in terms of your bottom line.
- Plan an effective price communications campaign.
Put as much effort into HOW you are going to communicate your price changes, as you do into WHAT the price changes will be. See my earlier article on the benefits of a 2-stage approach to implementing a price increase.
- Focus on your key selling points.
A price increase is a sales exercise: you want your customers to continue buying from you, so you need to remind them of all the positive reasons why they should continue to use you. Treat them as if they were a new prospect and do everything you can to reinforce the amazing value that you offer.
In these tough times, you really need to do everything you can to keep your business growing.
Don’t let your emotions stop you from acting. I promise you it’s never as bad as you think it might be if you put a sensible price increase plan into action.
If you need any help with this issue, just get in touch.