How to Communicate Price Increases with Your Customers

Price increases can be a huge worry for customers. To put your customers at ease when you take the difficult decision to implement higher pricing, here are our top tips for communicating the changes effectively.

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Whether you’re increasing prices to offset inflation or to deal with the rising costs of running a business, you’re not alone. Businesses often find themselves pondering over the difficult decision of whether to put prices up, but communicating these increases to your customers can be a daunting prospect that stops many from taking the plunge.

No business wants to alienate its customers when it comes to major decisions, especially those that affect the customer to such a big extent. So, it’s important to understand the best practices to follow when the time comes to explain price increases to customers.

In this guide, we’ll be going through some of the most common reasons for increasing prices and offering our top tips for effectively communicating the changes with your customers.

Reasons for Increasing Prices

There can be lots of different reasons for considering raising prices on your products and services. Determining the reason or combination of factors leading you to discuss an increase can give you a helping hand when it comes to justifying yourself to your customers.

Below, we’ll explain some of the most common reasons in more depth.

increase in running costs

Increase in running costs

It’s simple – when your costs go up, your profit margins will shrink if you’re still shifting the same amount of stock at the same price. If you don’t increase your prices in line with rising costs and you’re not selling more than before, you could risk losing your profits altogether.

An increase in running costs is one of the main reasons that businesses choose to raise their pricing. Whether it’s down to the recent implementation of new technology or the price of materials has gone up, your running costs are often a big variable that can impact profit and sales.

Industry trends

Industry trends can cause pricing to fluctuate. If you’re staying on top of trends and regularly conducting a competitor analysis, you could find that your prices are far lower than competitors. Your business might need to bump up pricing in line with others in the industry if this is the case.

industry trends
business growth

Business growth

As your business grows, it’s inevitable that your priorities can shift, and the pricing strategy might need to be reconsidered. Whether you’re forecasting an upturn in interest for a specific product or you’re expanding the business’ reach, an increase might be needed to fund further growth.

Maintaining profit

Securing and maintaining a profit for your business can be tricky, especially during periods when there’s a downturn in consumer spending or inflation is creeping up. Some businesses might need to increase prices on their products or services to ensure they don’t lose their profit and can keep the business afloat.

maintain profit

Top Tips to Communicate Price Increases with Your Customers

Your customers deserve a well-thought-out communication strategy when you decide to raise prices. So to help you create this, here are our top tips.

Ensure all employees are aware (before communicating with the customers)

Everybody needs to be on the same page before you even think about communicating the price difference to your customers. Internal meetings, discussions and communication threads need to take place across all teams so that all employees understand why the change is needed, when it will be implemented and what it means for your business operations. From your sales team to marketing to customer service, clear communication about the price will eliminate confusion across the board and make sure everyone is ready to embrace the change.

Your employees should also be well prepared to accurately relay the information to your customers and offer consistent messaging. The better their understanding is, the more seamless the communication will be between your employees and customers regarding the increases.

Be direct – initiate the conversation

The last thing you want is to implement price changes and let your customers find out for themselves without offering an explanation first. Say you offer a subscription service and customers only find out about the increase after the money leaves their bank account. This type of situation could leave your business with a PR nightmare to deal with, not to mention being unfair to your loyal customers.

To avoid this, always be direct and upfront beforehand. Let your customers know about the planned increase through their preferred method of communication. This way, you’re initiating the conversation, taking responsibility for the decision and being clear about when and why it’s happening.

Give your customers some time to process the increase

Your customers will need some time to get used to the change regardless of how big the increase is. Whether you plan to steadily raise prices over the next year or you’re making one big change, people need time to come to terms with the changes being made. Your customer base might also need time to re-assess their budgets or consider cheaper alternatives, which you should be on hand to help with wherever possible. 

Be transparent – tell them why & make it clear

Transparency is key in this situation, which is why it’s so important to have clear reasoning to back up your decision. If the price of your products is increasing by 10% to cover increasing running costs, your team needs to come up with a consistent message that incorporates the reason for this. In turn, your customers should appreciate the transparency and are more likely to accept the changes because they’ll know why the decision was made.

Demonstrate the value of your product or service

Knowing the worth and value of your business within your industry is incredibly important, but being able to demonstrate it to your customers is a whole other ball game. When you’re increasing your prices, this can be the perfect time to show your customers that you back yourself. Showing off your confidence in the business can end up increasing consumer confidence in the products and services, which can mean that the increase will be better received.

Communicate across multiple channels

 Not all customers will be checking your website regularly. Because of this, it’s important to be able to directly contact anybody that will be affected by the increase.

Of course, you’ll want to update product and pricing pages to reflect the changes, too. Your messaging across all channels should be consistent and clear, with no discrepancies.

Offer alternatives if possible

The price increases might not fit into your customers’ budgets, which is why you need to be ready with alternative solutions if you want to keep their business. You still want your customers to stick with your brand, so be ready to give them what they need. If you can offer a similar product or service at a lower price, keep them in the loop. Or, you could ask if they’re open to receiving exclusive discount codes or links to sales.

Ensure your Customer service team is ready for customer queries around the increase

Your employees should be well prepared to accurately relay the information to your customers and offer consistent messaging on the subject. The better their understanding is, the more seamless the communication will be between your employees and customers regarding the increases.

Thank your customers & reward loyalty

Maintaining loyal customers when you’re making changes to the pricing strategy is one of the most important things to focus on since this can help you keep sales up. Loyal customers need to feel valued when you’re making these kinds of changes, so be sure to thank them for sticking with you. It’s also helpful to provide reward schemes wherever possible. Try throwing in a free gift when they complete their first purchase with the new pricing as an incentive.

Price Increase Notice Examples: How to Tell Your Customers

Now that you’ve heard our top tips, let’s put these into practice. Below are a few examples of the ways you can give price increase notice to your customers depending on the reasons behind the decision.

Increase in Running Costs example
Maintaining Profit example

How to Handle Negative Feedback on Price Increases

No matter how well you handle the communication, it’s likely that you’ll still face some negative feedback on your decision to put prices up. But if you’re prepared to handle the feedback correctly, this can become the perfect opportunity to turn the negativity into something positive.

When you receive negative feedback about the pricing for whatever reason, start by taking an empathetic approach to the situation the customer is in. Understand where their feedback is coming from and come up with a solution that works for the business and the customer.

It’s also important to note that if you’re not hearing any complaints about the higher prices, then you could be selling yourself short with pricing that’s still too low. Listen out for feedback and pay attention to how customers are talking about the changes since this could prompt further increases. Similarly though, if you’re getting an unprecedented amount of negative feedback and you’re experiencing a drop in sales because of it, then you might need to rethink your decision before it damages your profits.

Gnatta Book a Demo

 Whether you’re still in the decision-making stages with your pricing strategy or you’re ready to start communicating the increases with your customers, we hope this guide comes in handy.

Want to see how Gnatta’s communication software can help your business? Try our demo.

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