The coronavirus pandemic has forced nearly all businesses to rethink almost everything, from operations to staffing to customer experience. It’s been an enormous challenge, and many businesses have lost revenue they couldn’t afford to lose.
But a time when everything is in flux also presents some opportunities to reexamine aspects of your business that you might not have questioned otherwise. Perhaps you’ve been rethinking your tipping policy as more and more customers are doing pickup or takeout. Perhaps you’ve renegotiated some supplier agreements, or streamlined other costs.
In some ways, the tail end of a pandemic might feel like the worst possible time to raise prices. But if you’ve looked at your books and you need to raise your prices to survive and thrive, there are ways to implement a price increase without alienating your customers.
Here are five strategies for successfully increasing your prices:
If your suppliers’ prices or your staffing costs have increased, consider transparently explaining this to your customers. A small sign near the cash register or a note on the website could do the trick. Be clear but brief; explain without apologizing. You’re running a business, not a charity. As long as your prices are in line with your local competitors’, most customers will understand that when costs rise, prices rise.
Whether or not you decide to post a message in your store or on your website about the price increase, prepare your staff to handle questions about it. Give them talking points to use when customers bring up the issue. Take a few minutes before each shift for a week or two to roleplay conversations about prices, so staff are prepared to answer questions in a friendly, upbeat way. And make sure you prepare your staff for the likelihood that a few customers will be angry, and may even threaten to take their business elsewhere. Remind them of the usual best practices for handling difficult customer conversations.
One way to help keep longtime customers happy is to create new options or packages that protect your margins while also giving price-conscious customers a cheaper option. For example, a restaurant that has to raise prices might add a new meal deal; a salon might offer a new package that skips some services. These new options could be available only during certain hours or on certain days, and should still protect your margins. The goal is just to avoid sticker shock on the part of longtime customers by giving them a fully refreshed menu of options, some of which are at the price point they’re used to, or even cheaper, while others are more expensive.
Make sure you’re still offering your customers a great value, even at your new, higher price points. Standout customer service can help smooth over any ruffled feathers that come from higher prices, and make your customers feel like they’re getting a great value for a modestly higher price. Look for inexpensive ways you can create a premium experience, whether through customer service or design elements that will enhance your brand.
You should be raising your prices regularly, once or twice a year, to ensure you’re protecting your margins against inflation. Make it a habit to look over key performance indicators for your business once every quarter, so you always have an eye on what’s selling, what’s not, and whether your margins are in line with your goals. Plan ahead—make sure you’re keeping an eye on issues like minimum wage increases in your area that might eat into your margins. If price increases are a regular part of your business year, then you can build events like that into your plan and, for example, raise prices in two or three stages, rather than reacting on the fly with a sudden, sharp hike.
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