Many business owners invariably reach a time when they know they need to raise prices. Maybe the competition is priced far higher, demand is too high to keep up with, or the perceived value of the services or offerings was initially undermined. Deciding to raise prices can feel intimidating; primarily when it’s time to communicate the price changes to clients.
In fact, some businesses are so worried about losing their clients if they change their prices that they simply don’t, or they honor their original pricing with the original clients. Ultimately, this can lead to resentment. If a price change clearly needs to be made, there are savvy ways to communicate it so that the client understands and everyone is happy. Here they are.
How To Communicate To Your Clients That You’re Raising Your Prices | Stephanie Burns
1. Give a notable reason for the change.
Clients are more likely to understand a price increase if there’s a valid reason behind it that they can grasp. If you run a salon, perhaps it’s because of the changing cost of materials. If you work 1:1 with clients and can’t scale, perhaps it’s because demand is more than you can keep up with. Whatever it is, being as transparent as possible about the decision will make you seem more trustworthy. If you were hiring or buying from someone who marked up their prices for no notable reason, you may start wondering if you should evaluate the competition’s offerings and prices.
Of course, this also depends on how much you’re raising the price. If it’s a marginal 5% raise, you may not need to go into a diligent explanation. But in the ballpark of 20% and more, you definitely should. Business blogger Elizabeth Wellington writes, “The breadth of the explanation needs to match the significance of the price increase – i.e, a small price increase requires limited clarification, but a big increase requires a lot of detail.”
2. Include other improvements with the price increase.
Rather than simply saying that the prices of your services or products have gone up, you may feel more comfortable if you include the price change with some notable improvements to your service offerings. This could be as small as creating a monthly resource newsletter for your clients or as big as an added 30 minutes per coaching session.
According to Cory Jean, a credits and receivables consultant and the creator of Powercredit, notes it’s all about making the client feel taken care of. “I always advise small business to communicate confidently that the price change will allow them to better serve their clients or customers,” Jean noted. “The improvement can be as simple as more time and energy spent on each client, because they’re spending more time with fewer clients.” You should consider how the price increase will ultimately help you serve the customer more regardless; now, it’s just about communicating this well.
3. Time it with the beginning of a new year or quarter.
Many businesses alter their offerings or prices in the beginning of the new year (or sometimes, a new quarter). It’s important that rather than saying, “Happy New Year! My prices have gone up!”, you give the customers plenty of lead time. If you plan to coincide the raise with Q2, let clients know a few months prior so there are no surprises. Small Business writes that this lead time should ideally include time to place one more order, or have one more invoice, at the existing price.
This can be done via an in-person conversation if you have frequent meetings with your clients, but it also may be easier to simply send out a company-wide client letter addressing the price change. That way, the reasons for the change, exact price increases, and date of commencement are written down with ample notice. Whatever you do, don’t spring it on a client last minute or simply send over an invoice with the changed price. It’s worth a conversation, and how you communicate with your customers says a lot about you as a business owner.
When the price change reasons and related improvements are crystal clear in your own mind, it will be far easier to communicate it to your clients. Let them know ahead of time and be as honest as possible. Once you know your prices are going to go up, double down on showing your clients your worth. A price change never scared off a truly impressed and loyal customer.