When you are your own boss, you don’t ask yourself for a pay rise… instead, you have to increase your rates.
This is the scary part of owning your own business, perhaps the biggest fear is if you scare away all of your customers?
Many owners shy away from this decision and therfore keep their rates the same for longer than they should.
Increasing your prices are a normal part of doing business though, but how do you do it without scaring away all of your customers and clients?
Why Increase Your Rates?
There are many reasons why you would want to increase your rates.
Perhaps you want to grow your business and achieve bigger goals?
Maybe your skills have improved and your service has increased in value?
One of the most common reasons for businesses is that their rent increases or other contractors increase their own costs which ultimately affect your bottom line.
Whatever the reason, you’ll need to increase your prices at some point as a business owner, but how do you increase your prices without annoying your customers?
The Truth About How Your Customers Will React
Here’s how most businesses envisage this scenario playing out:
Step 1: You raise your prices.
Step 2: Your customers & clients will get annoyed.
Step 3: Your customers & clients leave you.
Step 4: Your business closes.
The truth is, it rarely goes this way.
Most people tend to accept a price increase as part of life.
If your customers really value your product or service – they’ll probably understand that they are getting more than their money’s worth.
But for others, it might be necessary to implement precautionary measures before you raise your prices.
How To Make The Process Easier
One measure you can put in place is to inform your customers and clients in stages.
This means that if there is an unexpected scary backlash, you haven’t offended your entire audience.
Once you’ve done the first group, break the news to the others.
Another way to approach the change is to update your pricing to new clients and customers.
This means you can roll out this updated price to your previous customers when their yearly package expires.
This method works best with subscription service business models.
What To Do If Your Customers Leave?
As we mentioned above, an army of negative feedback will be rare, although you might find some clients or customers who will say they can’t afford your new rates.
Maybe that’s true, but maybe they’re also using this as an opportunity to go somewhere else or leverage a better deal?
If at all possible, try to part with these people on good terms.
Providing assistance in finding a good alternative, or freezing their price until the end of the year (if you have a subscription-based service) can go a long way in the lifetime of a customer.
Sometimes people have to go and see that the grass really isn’t all that green on the other side, and will come back as a more loyal customer.
The key to increasing your pricing is to ensure that you are continuing to provide value.
When you do this, increasing your price will often go unnoticed.
One thing’s for sure though: your business will definitely benefit from making this scary decision.
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