How small business’ can raise prices without alienating clients

Posted on by
Most small business owners often underbid their services to better attract sales.  Once established, they take too long to raise their prices.  The fear is that they will lose their current client base, and therefore lose money.  How can small businesses raise prices without alienating or losing clients.
Some of the more effective methods for small business’ to raise prices without alienating are:

1) Announce price raise well in advance, as well as the reason for new rates.  Include additional benefits to them that you are being added in your descriptions.  You can also offer a “lite” version at the original price – so not to loose any clients

2) Offer “Grandfathering-in” at original price for a limited time.  Anyone purchasing the service before that date will get it at the original price.  Offer a loyalty program such that clients that continue with you (either via a retainer, or subscription membership) will remain at the original price for 1-year.  Any break in service will revert to new price.  Any new clients entering after XXX date will pay the new higher rate.  This entices ‘on the fence’ customers some incentive to purchase ‘now’.

3) Offer a Club Membership Subscription – such that a reasonable membership fee will guarantee the original price as long as they are members in good-standing.

4) Offer a referral program that allows the customer to get compensated for bringing in new-paying clients.  Anyone bringing in new paying customers  get the original rate as well as the new customer.

5) Offer an advertising program that allows customers with their own facebook social media,  newsletters, blogs and websites receive the product/service at the original price.  Create a contract that requires the client to advertise XX times a quarter on their various social media wall, newsletters, blogs, and websites.  As long as they fulfill the advertisement contract, they pay the original rate.

Remember the goal of “price increases”:  You are increasing your rate to make more money.  If you can make more money doing other things, then you have been fairly compensated.  If you can reduce marketing costs or other overheads (allowing the customer to help with those tasks), then you can afford to compensate the client by giving them the original rate.

Giving the client options to stay at the original rate often eliminates the alienation feeling.  This way, the client is the one selecting the price they are willing to pay.

Create a campaign and marketing plan around your strategies. Use it as a catalyst event.

1) Make your “price change” announcement at least 3 months advance to encourage new clients to purchase at the lower prices.

2) Roll-out your loyalty programs and referral programs at least 2 month’s in advance.

3) Call (or visit) your high-influential, high volume  clients to discuss the price changes, the reason for them, the grandfather/membership plans, etc.  Allow your clients to choose how they want to participate.  This also allows you to give them a free membership or subscription to lock them into the lower rate.

4) One week before price change, remind folks that some of the discount offers will expire on the rate-change date.

5) Do a count-down a day before the event.  Make the price change an actual event.