Eleven entrepreneurs share their best advice for how to raise prices without upsetting customer:
No. 1: Try It
From Corey Blake of Round Table Companies
We raised our prices for services four times in 2013, and by the end of the year, we were charging nearly 100 percent more for our work. We were also delivering more value. Each time we raised prices, we were attracting clients who saw the value. If you're delivering awesomeness, charging more should give you the ability to deliver greater value as well as add to your profits.
No. 2: Explain Why
From Matt Shoup of MattShoup.com
A value behind the large price increase must come with the increase. Why are you raising prices so significantly? Is it due to the higher cost of goods, increased expenses that will bring more value to a customer or a need to operate at a higher margin? Be sure the end users paying the higher cost will ultimately receive value that can be explained.
No. 3: Create a New Product Niche
From Patrick Conley of Automation Heroes
It can be difficult to raise prices across the board without resistance, but sometimes a better solution is to develop a new "high-value" product for a specific type of customer. For example, you might be able to offer a new solution at 10 times the price point that is a great fit for specific customers and dramatically increases your revenue numbers.
No. 4: Do It Gradually
From Lawrence Watkins of Great Black Speakers
Consumer behavior research has shown that large, sudden jumps in prices is a recipe for losing customers. To get around this, increase the price in stages to avoid overwhelming the customer. So, if you are trying to raise the price from $50 to $80 for the year, try setting the price to $65 for six months. Then, raise it to $80.
No. 5: Do Market Research
From Evrim Oralkan of Travertine Mart
Go for it. However, to avoid offending existing clients, don't increase the prices for them without clearly explaining why you had to make this decision. It could be wiser to increase the prices significantly for new and prospective clients. Make sure you do your market research to ensure that they'll still choose your company over your competitors.
No. 6: Use the Price for Value
From Vanessa Van Edwards of Science of People
If you increase your price, people will put a higher value on you. I decided to triple the price on my product because I wanted to make it a specialty offering. I was expecting a large dip in sales, but the opposite happened. When I charged more, not only did sales increase but I also got higher quality students who really appreciated the learning. You're worth the higher price.
No. 7: Double Your Prices, and See What Happens
From Brett Farmiloe of Markitors
I worked with an apparel company that was previously selling its t-shirts at Old Navy prices. The boutiques and retailers wouldn't carry the t-shirts because of the cheap price tag, so the company almost doubled its prices. The boutiques and retailers started carrying them, and it gave the company flexibility to liberally use online discounts with consumers. Double up, and see what happens.
No. 8: Test It
From Andrew Fayad of eLearning Mind
Pitch your higher prices to customers who aren’t familiar with your current pricing before you look into raising prices with current customers.
No. 9: Offer Aggregated Value
From Alfredo Atanacio of Uassist.ME
Offer aggregated value. We once raised prices, but we offered additional perks, such as unlimited calls, dedicated phone line, etc. Even though we increased our prices a little, we were also offering other benefits.
No. 10: Use Core Customers as Brand Ambassadors
From Yuriy Boykiv of Gravity Media
Identify the core customers who are the least price sensitive, and use them as brand ambassadors to support your efforts to raise prices. If you deliver value, everyone else will follow.
No. 11: Stay Competitive
From Sean Marszalek of SDC Nutrition, Inc.
Businesses need to stay competitive in their pricing strategy. I think companies need to examine their products and services and evaluate competitors' pricing. Quality should also dictate how pricing is structured. We strive to provide the best quality products at the most affordable price.
The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world's most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.