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Tips for increasing prices without alarming customers

How to maintain healthy margins while keeping customers happy.

Published: January 08, 2015
Updated: February 17, 2017

Finding the right price for your product or service is a vital part of small business. To maintain healthy margins and grow your business, raising prices without alienating customers is paramount. Here are three tips for doing so.

Sales tip 1: Be upfront with customers

"I sum up the way the best companies have handled [increased prices] with one word: communication," says Adi Bittan, co-founder and CEO of Menlo Park, California-based [OwnerListens](https://www.ownerlistens.com), a mobile messaging platform that enables businesses to text and instant message with their customers.

Bittan warns against blindsiding customers. Instead, tell them about your plans to increase prices, including the amount and date of the increase. "Giving customers time to adjust budgets and expectations is not only courteous, but it will also give you visibility into the level of objection you will encounter," she says.

Jillian Lama, owner of healthy dessert company Oh Sweet Heavens! in Washington, D.C., suggests giving one week's notice in advance of a price increase. That way, customers can take advantage of the lower price for a week if they wish.

When explaining a cost increase, avoid clichés such as "costs are increasing." "The more concrete you are and the more data you share, the more believable your explanation," Bittan says.

Sales tip 2: Emphasize the value

The success of companies like Starbucks, Tiffany, and Whole Foods proves that high brand value can offset higher prices.1 Most customers consider a balance of value and price when purchasing. By communicating the value of your product and your brand, you can control customer perceptions when it comes time to increase prices. And in the best-case scenario, increased costs come with added services.

Oh Sweet Heavens! — which often uses local, organic, and fair trade products to emphasize the brand message of flavorful, healthy desserts — had to increase prices to more realistic levels. To sweeten the deal, Lama included add-ons to the orders. "We often added extra treats, especially if we were testing new flavors or products, or simply wanting a little feedback," she says.

Sales tip 3: Prepare your team and yourself

As prices change, train your employees to speak about your business and its products' values. Rather than enter a lean period of low sales, your team can emphasize your company's unique selling proposition and describe how higher prices will enable the company to grow and better serve the customers.2

Also, stay firm in your decision to raise prices. "I give a brief explanation of the price increase, but I don't feel guilty about it, nor do I feel the need to explain every last detail or hand over my whole QuickBooks account," Lama says. "You're not in business to be a charity; you're in business to create a lifestyle for yourself, and create jobs and opportunities for others in your community."

Get more tips on creating and adjusting your business strategy.


1 "Three Ways to Raise Prices Without Losing Customers." Entrepreneur. http://www.entrepreneur.com/article/219752

2 "How to Raise Your Prices Without Playing the Blame Game." Entrepreneur.  http://www.entrepreneur.com/article/225928

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