Occasionally, your brand may be forced to increase the prices of your core products and services. Even your most loyal customers may be disappointed by this, especially if they chose your brand specifically because it had some of the lowest prices available.
So, how do you explain this without alienating your best customers?
Prices fluctuate for a variety of reasons. In a free market, this is often dictated by supply and demand, though each of these categories of influence can be further broken down into sub-factors. When the prices of raw materials increase, or when those raw materials are in shorter supply, it makes sense for the final product to see a price increase.
We can better understand this through the lens of asset prices. When you look up the current Enjin coin price, you can see its micro-shifts throughout the day and see rather dramatic shifts throughout its history. Some of these shifts are directly attributable to specific events – such as good press, broad economic concerns, or changes in public sentiment – while others are somewhat anomalous.
In your business, there will be several variables outside of your control, including prices of raw materials, economic conditions, and competitor actions. All of these may have some influence over your pricing strategy, and all of them may be relevant for your customers to understand. Your first job, therefore, is to pinpoint exactly why you’re raising prices. Once you have a solid vision for your pricing, you can form a strategy for how to communicate it with your customers.
Communicating With Customers
What’s the best approach to tell your customers about a forthcoming price increase?
- Communicate internally first. Before you break the news to your customers, make sure to hold internal discussions and get everyone on the same page. The price increases should not come as a surprise to your customer service team (or anyone else for that matter). This way, your entire organization can remain aligned as you dispense news, answer customer questions, and handle any negative complaints or press you get.
- Provide advanced notice (when you can). The more advanced notice you can give your customers, the better. People want the opportunity to plan and make adjustments if and when necessary; for example, if you tell customers you’re increasing prices next year, they’ll have plenty of time to make accommodations. This isn’t always possible but do try to give as much advanced notice as you can.
- Be direct and to the point. When revealing the news, be direct and honest about the price increases. Don’t bury them or try to hide them; it’s only going to make your business seem shady, indirect, or manipulative.
- Explain the circumstances. If appropriate, explain why you’re increasing prices. Perhaps your material costs have increased. Perhaps you’ve struggled to manage finances during record high inflation. Or perhaps you’re investing in higher-quality services and you need the extra revenue. As long as your explanations seem reasonable to your target audience, you’ll stand to benefit.
- Emphasize your value. Take this time to remind your customers why they’re buying from you – and not one of your competitors. When customers see a price increase, they immediately start recalculating the value equation; is this the time to switch to a competitor? Make sure this doesn’t happen by highlighting your competitive differentiators and the factors that make this price hike worth it.
- Offer alternatives. One common strategy when increasing prices is to offer alternatives to your existing customers. If a customer isn’t willing to pay the new, increased price, would they be willing to continue paying the current price for a lower volume or fewer services? If you’re concerned about losing frugal and traditional customers, this could be a smart move.
- Incentivize loyalty. Now could be a great time to incentivize loyalty with rewards or bonuses for your longest-running customers. Coupling a price hike with a new loyalty rewards program or a special bonus could be the “spoonful of sugar” that helps the medicine go down.
- Invite questions and concerns. Make it clear that you’re open to questions, concerns, and other forms of feedback from customers. Some of them may be upset, and your customer service interactions may not be particularly pleasant in the days following this announcement. But if you’re open and receptive to customer feedback, things will play out much smoother.
Increasing the prices of your products and services could cause a rift in your customer base; there’s a chance you’ll lose some customers or see a decline in customer sentiment as a result of this decision. But if you handle this professionally and appropriately, you can make the best of these circumstances – and hopefully secure the increased revenue your business needs to thrive.