With inflation on the way up, is it time to raise your prices? A few reasons why you should – and some reasons why not – so you can consider your next move.
The rising cost of goods and services has been driven by local labour shortages as well as higher shipping costs and product scarcity worldwide.
The result of all these higher prices is that it is becoming more expensive to run your business.
Should you increase your prices?
Reasons to increase your prices
You could be ready to raise prices if:
- You haven’t raised prices for a long time, or you usually raise prices annually but didn’t in 2020.
- Competitors are raising their prices, or you’re more than slightly cheaper than the competition.
- You have reviewed the market and you think customers will accept a price increase.
- Your costs have increased significantly and you need to meet those costs.
Reasons to leave prices the same
You might choose to leave prices the same if:
- You recently raised your prices.
- Competitors are not raising prices, or you’re more expensive than the competition.
- Your research indicates your clients would not accept higher prices.
- The cost increases haven’t impacted your business much.
- Changing to new pricing would cost more (in marketing or printing prices, for instance) than you would gain.
A difficult decision
It can be difficult to make the decision on increasing your prices. We can work with you to run a cost-benefit analysis of the potential outcomes, so just drop us a note or give us a call and we’re happy to help.
How can I put my prices up without losing customers?
If you need to change your pricing to make ends meet, be honest and up-front with your customers at all communication points.
- Make it clear on your website and social media that prices have changed and why.
- Send an email to let all your clients and suppliers know about the changes.
- Meeting people face-to-face? Make sure they’re aware of the price hikes before they’re invoiced – otherwise you could be in breach of the Fair Trading Act.
- Provide the best customer experience you can by updating staff on any changes and advising them on how to communicate them to customers.
- Worried you’ll lose fans? Consider staggering price increases of individual products over time.