Selling a price increase to your customers

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selling a price increase to your customers

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Premium plans. Connect your favorite apps to HubSpot. See all integrations. We're committed to your privacy. HubSpot uses the information you provide to us to contact you about our relevant content, products, and services. You may unsubscribe from these communications at any time. For more information, check out our privacy policy. Written by Swetha Amaresan swethamaresan. It happens to every business. There's been a change in your industry and as a result, the resources and services needed to produce your product cost more.

Now, you have to tell your customers, who have been loyally standing by you for years, that you have to raise prices. You're probably putting off the conversation, worried about how customers will react. It almost feels like you're letting them down.Business owners raise company prices or individual product or service prices for various reasons.

In some cases, price increases relate to a strategic plan of becoming a higher-quality brand. Other times, increases result from higher costs that the business passes on to customers. As a business owner, you need to weigh the potential implications a price increase can have on sales volume. The law of demand indicates that under normal circumstances, demand for a good increases with a price decline, and decreases with price appreciation. The relative change in sales volume isn't the only economic consideration in a price change.

If the relative change in demand pales in comparison to the benefit of increase revenue per unit, the price change makes economic sense. Also consider the correlation buyers make between quality and price. In general, consumers assume a higher price relates to a higher-quality product. Raising prices to coincide with effective product development and promotional branding may actually improve your sales volume in higher-income market segments. If you raise prices without effective improvements or promotion, though, the typical law of demand results will likely apply.

The effects of price increases depend on their timing. Raising prices when goods are in greater demand can increase revenue without much adverse affect on volume. When buying seasonal goods, such as Christmas decor or back-to-school products, shoppers typically have less concern with price than they do availability or quality. Some retailers raise prices or sell higher-priced merchandised at such points. In more typical shopping periods or after demand wanes, a price increase will likely get noticed more easily by budget-conscious customers.

selling a price increase to your customers

Neil Kokemuller has been an active business, finance and education writer and content media website developer since He has been a college marketing professor since Kokemuller has additional professional experience in marketing, retail and small business.

Share on Facebook. Simple Economics The law of demand indicates that under normal circumstances, demand for a good increases with a price decline, and decreases with price appreciation. Revenue and Profit The relative change in sales volume isn't the only economic consideration in a price change.

Quality Considerations Also consider the correlation buyers make between quality and price. Other Insights The effects of price increases depend on their timing.Penetration pricing is the practice of setting a low initial price for a product or service to entice customers. It is a competitive marketing strategy that aims to increase sales by attracting a wide number of customers to new products at initial low prices.

Along with great customer serviceadvertising, promotions, and other marketing strategies, penetration pricing can help increase your revenue and grow your business. Penetration pricing is designed to entice discriminating customers searching for the lowest prices. It involves initially pricing items or services lower than the competition to attract a large number of customers.

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Having the lowest price among your competitors will immediately draw attention to your business. Buy-one get-one-free BOGO is a common penetration pricing strategy, as is heavily discounting an item or offering it for free when purchased with a related product. As with any marketing strategy, there are advantages and disadvantages to penetration pricing that should be considered before implementing this plan.

The advantages of this type of marketing practice include:. The disadvantages of using this strategy include the following:. The following examples will help you recognize penetration pricing at work:. Predatory pricing is penetration pricing taken to extreme levels to drive competition out of the market and establish a monopolywith the eventual goal of normalizing prices after the competition has disappeared.

In today's competitive marketplace, retailers must constantly think of new ways to attract customers to keep their businesses viable. One strategy is penetration pricing, which initially sets the price of new products or services below the competition.

9 Ideas for How to Upsell Your Customers and Increase Sales

It's important to weigh the pros and cons of this practice before implementing it to minimize the risk of it negatively impacting your business. Also, once you've brought customers to your door, you will need to consider how to keep them. Full Bio Follow Twitter. She has run an IT consulting firm and designed and presented courses on how to promote small businesses.

Read The Balance's editorial policies. Pros Gain consumer attention, which increases cash flow Capture large market share Clear out excess inventory.In the present scenario, companies give much importance to finding, targeting and acquiring new customers. However, they often tend to overlook the significance of staying connected with existing customers.

Such customer can contribute massively to sales if treated with care.

Price Increase: How to Sell to Your Customers

In order to sell smartly, companies need to understand the importance of customer retention and take various measures for the same. Considering above stated benefits companies should incorporate various steps to stay connected with customers. Below stated are few strategies that will help you in the same. Customers always admire if the company and its personnel listen to them. It gives a feeling of importance to customers, resulting in better customer relationship.

It also helps the company get knowledge about needs and expectations of customers giving way to improvements. Always be honest with your existing customers.

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Be sure the product exhibited and demonstrated by you is of same quality and standards to what is being sold. Sticking and rendering your policies in the same manner as stated in your company norms helps to build goodwill among customers and results in increased sales.

Employees with the perfect combination of knowledge, skills, personality and experience know the importance of retaining existing customers and take various steps for the same. Moreover, the customers also feel comfortable and satisfied when such employees deal with them.

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It is always a good practice to remind your customers time and again about your company and its product. Keep a contact record of customers and update it. Use this record and send them special offers, information about new services and products, a birthday card ,etc. Complicated ones lead to irritation and confusion in customers and they refrain from dealing with the company in future. It is always appreciated by customers if you thank them for doing business with you, if possible send a written thank you note.

This helps in improving the products to meet needs of customers thus increasing demand and value of product. Importance should be given to render proper after- sale service to customers. This will help customers feel safe to do business with you in future. A loyal and active customer engaging with the brand on a regular basis should be provided with free product, special discount, free upgradation to premium services and other value added services.

Selling a Price Increase in a Soft Market

This is one of the best tactics used by most of the companies. Try to figure out needs of a customer and persuade them to buy something additional than what they intended to buy from you. For instance, if they are looking for a sofa set ask them whether they are constructing a house and try to convince them to buy other furniture from you. Customers should be contacted using various channels available, for instance, face-to -face, on telephone, through web or social media ,etc.

The contract can be made with related companies for promoting your product and in return you promoting their products. For instance, if you are a real-estate company, you can be in contract with interior decoration companies. Delivering best products and services helps to maintain goodwill and loyalty among customers.Similarly, many of us have been faced with a belligerent customer who not only is unwilling to accept your price increase, but also threatens to switch to your number one competitor.

Take a deep breath and relax! The reason is simple: the cost of switching to a new supplier is too great. Their goal is to get the weak-kneed salesperson to cave in and give them a discount, and many of them are successful in securing on-the-spot price reductions just because of the forcefulness of their veiled warning of switching. When you are presented with the threat of a customer moving to another supplier because of a price increase, focus in on the cost of the conversion instead of allowing yourself to panic.

Start by looking at what they will have to go through to set up and to start receiving from a new vendor. Now, take this and multiply it by four.

The reality is that the customer is not just setting up a new vendor, but also phasing out an old one in addition to dealing with the wide-range of conversion issues that will inevitably arise. To better help you understand the risk involved in actually making the change, think for a moment about the hassle you go through when you try to alter a flight on the same airline or your cell phone plan even if you stay with the same carrier.

Similarly, consider what is necessary to adjust your automobile insurance or to reschedule medical tests. With each of these same examples, think of the added work you would go through if you were not just changing plans, but also changing companies.

Because of the significant amount required, you would probably think twice about making a switch. Now put yourself in the shoes of a business and think for a moment about the work that would be required for them to change to another supplier. Threatening you is not costing them anything. Carrying it out actually will. The decision to switch is not just about the absolute cost.

On nearly every occasion, it takes time to make a switch, thus carrying an added element of risk. The next time you are warned of a potential switch from a customer, be proactive and prepared. Do your homework.

Closing the Sale: 9 Common Objections

Research what it would take for them to actually make the change to a new vendor. In most cases, it will be hard for a customer to realize any type of a return just from switching because of a price variance. Could the other supplier guarantee the same level of service you and your company provide? Could the other company provide the same level of sales leadership that you bring to them? Your email address will not be published. Want to succeed online and increase the sales of your online store?

Here are some home business ideas that you can do start today. Visit our List of Home Business Ideas. Facebook Twitter Pinterest Print E-mail. Share via. GD Star Rating loadingGuidesMarketing. From time to time, every business faces the question of raising its prices. To maintain customer loyalty and continue stable growth, explore tips on how to announce your price increase correctly. However, you should know your competition, and be aware of all the risks.

Here are nine proven ways to tell customers about a price increase. The clearer you are with your customers, the less potential there will be for misunderstanding.

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If they have time to check out the new terms and conditions, they are less likely to make emotional decisions. Publish price increase announcements on your website to inform new visitors about changes. Show both old and new prices, as well as the percent increase.

Transparency helps customers to make a choice. Instead, allow them to make an informed decision. Give your customers a limited-time offer to receive the new product with fewer options at the current price. Set a time limit for this offer. And, highlight the benefits of the new full-featured product.

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This will give them time to consider the value of paying a higher price. Provide a guide on how to upgrade to the new version of your product. If customers are fully informed about changes, and understand them, they are more likely to remain as customers. In the case of B2B companiesyour clients are interested in a stable relationship. A modest price increase is typically not a serious problem.

Be sure to update all of your marketing materials to reflect the new conditions. Check any presentations to make sure that any new customers are given correct information. You may need a new strategy for communicating with customers.

Once you have it settled, discuss it with all of your employees. Ensure that every manager, marketer, etc. Think about how to announce a price increase to clientsand highlight the main reasons for it. Inform all customers as soon as possible, according to the new strategy. Personal attention makes your communication more valuable. It is particularly important to communicate directly with your clients on sensitive topics, such as price changes. Provide customers with full info about new prices.

Note their requests and comments. Be polite, describe conditions, but do not apologize for your new plans and financial strategy. In your email of a price increase, note the duration of the business relationship with your client, and what you have achieved together.

Form a unique offer for this customer with personal conditions. For many customers, personal communication with company staff is important. This is especially true if they need a better understanding of the reasons for the change. Offer them the opportunity to speak with a manager or executive. Transparency shows your loyalty to your customers. If they can reach out with concerns or questions to anyone in your company, you build trust even in the matter of price increase.

One option is to add a Call-To-Action button in the email so that customers can contact you for further questions, or provide a chat feature in a user profile on your website.To do this, you have to reach as many people as possible by way of advertising, promotions, and offers. These are all effective ways to grow your business but another worthwhile option is figuring out how to upsell your customers. Upselling is a sales strategy used to convince customers to buy more products — usually at a higher price point.

Sellers that understand how to use upsells so that customers gladly increase their cart value are well on their way to increasing conversions and sales.

While large e-commerce sellers like Amazon dominate upselling, smaller e-commerce sellers have been slow to adopt these strategies. To help you increase your sales, here are nine ways to get customers to buy more — without compromising their experience. Unlike other sales strategies that take place early in the customer journey — like running Facebook ads to get people to your website — many upsells happen closer to the end of the journey when customers are either ready to buy something or have already bought something.

At this point, customers know enough about you and your products to continue on to your checkout page.

selling a price increase to your customers

At this point, customers feel comfortable and are open to indulging in a little impulse buying. So instead of creating a checkout sequence that only captures payment information, use your checkout process to introduce an upsell:.

Think about it. By simply asking a customer to increase their cart value, your sales increase and you save money that would have otherwise been spent on customer acquisition tactics.

Upsells are an easy win for you. Keep in mind that, even though upsell is used as a broad term to increase sales, there are actually four ways to ask customers to buy more. They are:. If you see a specific customer need or trend, use it to create an upsell opportunity. An upsell offer, combined with products your customers are already receptive to, makes the buying decision easier. This is because customers are getting what they want and they already trust your brand.

A special offer also increases your chances of boosting sales. This approach works because, even with the discount, the customer still spends more than they would have.

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