How to take a price rise 📈 without losing customers

How to take a price rise 📈 without losing customers

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Taylor Wells builds leading pricing teams and helps you implement profit-generating strategies for your business.

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In times of supply chain bottlenecks and materials cost inflation, businesses across industries are raising their prices.

But there are a lot of companies out there increasing their prices and still losing money. The problem is simple: Many businesses lose hard earned revenue because they don’t have a well-structured price rise strategy.

In this video, I’ll be providing some tips on how to take a price rise that your customers are unlikely to reject. By the end of this video, you’ll know when to take a price rise and how to take a price rise.

When should you raise prices?

1. When the market moves – If competitors are offering their prices at a lower or higher rate, you need to keep up and keep track of the market.

2. During times of inflation – When there are rising costs, FX and trading is affected all over the world, it becomes a domino effect among industries.

3. When there is a significant supply shortage and demand is growing – Or if there is a shortage in your inventory due to increasing demand.

How should you raise prices without losing customers?

Avoid euphemisms
Softening the blow of a price rise doesn’t help customers feel any better about them. In fact, it only makes them more suspicious.

Terms like ‘price updates’ or ‘adjustments.’ Just don’t work. Customers saw through the rhetoric. Just call it as it is. A price rise.

Be straightforward

Most executives and their teams are reluctant to clearly communicate a price rise. But should they be?

A recent study shows that customers interpret the “fairness” of a price increase as the second most important factor.

If customers don’t believe your price rise is justified, they won’t respond to it well.

Turning this around, though, if customers do think your price rise is justified, they will pay the price.

Implication

Managers don’t need to hold off on price rises, they just need to do a better job of calculating and communicating them to their customers.

The same old cost-plus methodology – with a crude percentage mark up across your product portfolio and a templated letter all about you is going to make customers angry.

You want to take a more sophisticated approach to pricing. Consider a price rise from the customer’s perspective. Why do they choose your brand? What sets you apart from your competitors? How do they buy? Why do you win some customers but lose others?

Bottomline

In a time of significant inflation - spurred by supply shortages, fluctuating commodity prices, increasing interest rates, and labour shortages, getting your price rise calculations and communications spot on are critical to protecting profitability and ensuring your customers don’t switch.

The essence of a good price rise is knowing when to take the increase, clear communication to customers, and price calculations that not only take your costs and your margin targets into consideration, but also the economic value of your offer to customers.

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For more information please contact us.
[email protected]
+61 2 9000 1115

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