You hold the most powerful, the most profitable business lever in your hand, and you’re afraid to use it. Raising Prices.
Sure, you may have had a recent price increase. Inflation made for a great excuse. But did you even keep up with inflation? I would have said the same thing before inflation hit. You do not charge enough to some of your customers.
Why don’t you raise prices? Because you, or someone in your company, is afraid. You’re afraid to lose a customer. You’re afraid a customer might say nasty things to your face. You’re afraid a customer will write a negative comment on social media.
You’re afraid to raise prices because you don’t know what will happen. That’s understandable. But don’t let fear keep you from growing. Here are four recommendations:
- Segment your market: Learn what value means to each segment
- Create a plan for each segment
- Communicate carefully
- Have a fallback plan
Different customers are willing to pay different prices. Spend time determining which customers get the most value from your products. This is not easy, but it builds your confidence immensely. When a customer is receiving a lot more value than they pay for, they will accept your higher price. Nobody likes price increases, but we all encounter them and accept most of them.
For each segment, create a plan to test a price increase. Find a subset and raise prices. See what happens. When nothing horrible happens, roll out the price increase to the rest of that segment.
Part of every price increase is telling your customers, especially if you are in a recurring revenue business. Craft a thoughtful, compassionate explanation for why your prices must go up.
Have a fallback plan. When someone calls to cancel, have some pre-defined tactics to keep them. Worse case, you can eliminate the price increase for that customer.
Pricing is powerful. There is no doubt that you are leaving money on the table. The only question is, are you brave enough to get it? Share your comments on the LinkedIn post.
Your bravery skyrockets when you deeply understand how your customers value your products. If you’d like some help, feel free to contact me.
Now, go make an impact!
