How Do I Tell My Customers About A Price Increase?
The thought of raising prices for our products or services makes many of us a little queasy. We know that our costs have gone up or the value of what we provide has increased, but we struggle to charge what we are worth and what we need to make things work. How do you raise prices in a way that doesn't alienate your customers?
~ First crunch the numbers
What are your actual costs for delivering to your customers. This should include any supplies, materials, time for actual production or delivery, but should also aggregate in your overall costs for keeping the doors open and the lights on. Then you can start to determine what your price per hour, per project, or per product should be. If you are seeing short-term, market-related increases for your costs, you may decide to just do a temporary increase and communicate that clearly to customers.
~ Time your increase strategically
Your business has its own "seasons" or cycles that should inform your timing. Maybe when you launch a new product line, pricing increases. Or perhaps you re-assess pricing at the start of each financial year (which may not be in line with the calendar year). Or maybe you start mid-year with increased pricing for new customers and bring older customers on board later in the year in a more gradual fashion. You can also increase prices for most of your clients in a blanket fashion and offer a stepped increase for your best or biggest clients.
~ Communicate, communicate, communicate
Nobody will be happy to see a a bigger bill than anticipated, so make sure your prime your customers as much as possible. For bigger, long-term increases, send an email out 60 days in advance with the new pricing. If you are planning ahead for the increase, start pricing new clients at the new rate as far in advance as possible. Even as early as 6mo out. I would also remind customers of the increase a few weeks before their increased invoice or autopay charge goes into effect.
And more importantly, make sure you communicate why the prices are going up. Are you offering more or better service? Have your costs increased because of factors outside of your control? How has your business grown and changed since they started working with you?
And finally, make sure your customers know how much you appreciate them and their business and keep your communication lines open for their feedback or even complaints. Your customers work with you because you meet an important need that they have. If you continue to deliver quality service, they will more than likely not even think twice about paying the increased prices. They probably knew you were worth it before you did!
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