Because you’re worth it…How to implement price increases
The rising cost of living is a key topic of discussion at the moment and from the price of petrol at the pumps to food in your supermarket trolley, we are all noticing the effect of inflation on our budgets. But just as the cost of items is increasing for personal purchases, businesses are also feeling the impact. Depending on the type of business, rising prices may be having direct reduction on profitability or in other cases, inflationary pressures may need you to take more money out of the business to cover wages.
Regardless of the circumstances, many businesses will be considering raising their prices over the coming weeks and months to account for inflation. Here we give some tips and advice on price variations.
Do your research
If increasing your prices is something you feel uncomfortable with, it may be a good idea to conduct a review of what competitors are charging and how your prices compare. You may find that others are already charging much more than you for a similar product/service. This should give you the confidence to increase prices – because you’re worth it!
Time it right
Everyone is aware of the issues around inflation at the moment so if you aren’t able to increase your prices now, when will you be able to? In many ways, you may be better acting sooner rather than later – nobody wants to be the straw that broke the camel’s back! Other ‘good times’ to consider introducing price variations is the start of a new calendar or financial year. It is then possible to link the price changes to a wider review of the way you operate, making it easier to justify. If appropriate, you may want to give clients advance warning that you are going to increase prices – maybe one or two months ahead of time.
Complete the paperwork
How you actually implement price increases will vary depending on the type of business. Service based businesses will need to review their charging structure across their client base and propose new prices for agreement. Where contracts are in place, the terms of these will need to be reviewed as it may be that you are tied into charging a fixed price for a certain length of time.
Once new fees have been set out, any corresponding paperwork pertaining to your contract will need to be amended and signed. At the very least, you should clearly set out the changes to your pricing in an email or written document and obtain a written agreement.
Changing prices is often easier for retail businesses as it is simply a case of deciding what you want the new prices to be and displaying these alongside products. If you sell via different channels, make sure your prices are updated across all of these for consistency and to avoid customer confusion.
For more information on how to price your services, take a look at our blog The 5 P’s, Pricing and Picasso.
And for anything else, we’d love to chat! Get in contact here.