When To Raise Your Prices
by Danny Brown on February 12th, 2008
One of the biggest questions business owners face is on the subject of price. The problem is when to raise whatever prices you’re currently charging for your products. After all, your prices are probably one of the things that attracted a customer to you in the first place, along with service and product. They’ve made you successful, but now you’re thinking it might be time to up your fees or prices. But how do you do this without upsetting your customers?
If you’re unsure as to whether or not you should raise your prices, there are some questions that you can ask yourself to help you decide.
Know Your Customers
Do you know what your main customer base is? Knowing what criteria your customer base falls into can help determine whether you can raise your prices or not. If your product price is a minimal percentage of what their income level is, you can afford to raise your prices. This is where market research comes in.
Filling a Need
Does your product or service offer something that’s hard to get anywhere else? Do you fill the needs of the people that buy from you? If so, this is another key factor that works in your favor when it comes to raising your prices. If you make a customer’s life better with your goods, they’re not going to stop buying from you for the sake of a few extra dollars.
High Conversion, Low Refunds
If you’re sales are excellent, and you get a sale almost every time someone views your product, you know that you already have a successful product on your hands. If this is combined with low refunds or returns, you also know that this is a reputable brand or product that you have, and that’s a powerful combination. Offering service and reliability will always see people willing to pay more.
Repeat Purchases and Referrals
One of the best ways to know whether it’s time to up your prices is from repeat purchases and referrals. After all, if someone is happy enough with your product or service to use it time and time again, as well as recommend you to others, you know you have something that’s worth a lot more. The best form of advertising is word of mouth; so don’t be afraid to take advantage of your popularity.
Of course, there will always be times when you’ll have disgruntled customers complaining about you raising your prices, no matter how legitimate the reason. If you want to avoid this, there are ways to up your prices and keep your customers happy. Don’t raise them too much – a big jump will certainly upset even the most ardent of your clients, so raise a little at a time, perhaps reviewing it in 6 months time.
Another way to raise prices and keep customers happy is to inform them well ahead of the increase, and offer them your promise that this will be frozen for a set amount of time. Make sure they know the value of your product as well, and that even at the new price they’re still getting great value. As long as you’re fair and open, you should find that raising your prices will be easier than you think.
