Small businesses depend on their established customer base, so the idea of raising prices can be scary; this causes SMEs to be caught in a cycle of undercharging for their product, which can lead to devastating effects. There are, however, several methods that will help minimise the potential damage of price structure changes.
Distinguishing value from price
In the event that you raise your prices, your customers are inevitably going want an explanation that is backed by well-thought-out evidence. Thus, it is crucial that you have distinct, clear, and understandable reasons as to why your product price is increasing. By demonstrating to your customer that your product is of superior quality and value, especially when compared to your highest charging competitor, your customer will see that regardless of the price increase, your business is still the right decision.
Minimising risk for the customer
Customers usually don’t mind paying a little extra if they know that their money is protected and there is very little risk in their decision. By offering explicit guarantees on your work, customers will be more willing to spend their money on a more expensive product. Guarantees should be structured in a variety of ways, with the goal of having a guarantee that meets the needs of different customers.
“Discounts are one of the best ways to entice a customer to make a deal and you don’t have to lose money in the process.”
Restructuring your prices
Simply increasing prices can be a bit too upfront for some customers, so it may be best to change the overall price structure. You can break the price up into a payment schedule so that the customer can pay overtime instead of all at once. This allows the customer to see your product or service more as an investment rather than a simple purchase. You can also change how you charge separate costs; for example, you can charge separately for installation, delivery, storage, or urgent orders. Or, you can create special packages of these that do not necessarily lower the price, but change the way it is proposed.
Discounting
Sometimes, discounts are one of the best ways to entice a customer to make a deal. But, you don’t have to lose money in the process. By switching flat-rate discounts (like 5% on all products) to step discounts (10% on the first £1000, then consistent amounts for the following £1000s). These discounts are more attractive to customers, and the increased business often accounts for the discounts.
By using these tactics, you can keep your business afloat and at par with the economy, all while maintaining your client base and image. If you find yourself having difficulty implementing these strategies, a professional may be able to help!