Inflation has been running high for a while, wages are rising and supply chains are still catching up after the disruption of the pandemic. Many businesses are facing increased costs and many managers are considering how to increase prices in order to maintain profitability.
Is now a good time to increase my prices?
There are a lot of things to consider before increasing your prices. For example, are you locked into any long-term contracts with customers where there is a fixed price arrangement in place for the next few years? If so, it’s unlikely that you will be able to increase prices for that client right now.
If your industry is suffering from supply shortages and demand is high, then your customers are more likely to accept a price increase.
Price increases are a normal part of business. Yes, some clients may not like it and may look elsewhere, however, if your pricing is in line with the market then they are unlikely to get a better deal from your competitors.
If I decide to increase prices, how do I do it?
You need to plan how best to communicate this to your clients. It’s best to inform your clients of any price increases in writing – whether that’s via email or letter. You should communicate in a concise and upfront manner.
Before going out to customers, you must also ensure that everyone within your business is aware of the new pricing structure, the date that the price increase takes effect, how this effects their sales targets, etc. You should also equip your team with information on how the new pricing compares to your competitors, how to handle objections from customers etc.
When informing your clients about a price increase, your communication should clearly state that your prices are increasing and the reasons why (such as increasing costs of business, inflation and so forth). Your communication should state that your prices are going up, the reason for the increase, the date the price increase will go into effect and any actions that they need to complete (if required).
If you need any more guidance, don’t hesitate to contact us.