Increasing prices is one task that lots of business owners dread. They dread it so much in fact that they’ll find a reason as to why they shouldn’t do it..
The decision to not put up prices seems odd and counter intuitive.
At the end of the day business owners are in business to make a profit and increasing prices will lead to more profit.
….and conversely NOT increasing prices will make them poorer.
So, if pricing has such a big impact on the financial health of a business the question is why do so many business owners dread putting up their prices?
In most cases it all comes down to fear.
…..and until that fear is overcome the price increase will be put off over and over again..
This article will outline some of the most common fears business owners have and will give some practical ideas to overcome them:
FEAR 1 : Fear customers will leave
Many business owners believe that lots of their customers will leave and go to someone cheaper if they put their prices up.
What they really worry about is the consequence of that. Falling sales. Lower profits. Worsening bank balance. Stress about how to pay the bills and what the future may hold.
INSIGHT
The reality is this fear is unfounded. A vast majority of customers will NOT leave. They’ll stay and continue to buy for a variety of reasons – interestingly price is rarely one of them. Price of a course is a factor in a customer’s buying decision but it is rarely the most important.
The truth of it most customers are looking for value – not a cheap price.
The secret is to focus on giving value and ensure your price is reasonable / fair in comparison.
FEAR 2 : Fear they won't win any new customers
In exactly the same way business owners worry about losing customers they also worry that they won’t be able to convert prospects into customers because they’ll be scared off by a ‘high’ price.
There will always be some prospects who are looking for the cheapest price. For them price is the only thing on their mind in their buying decision. These prospects are likely to be, firstly, in the minority and, secondly, unprofitable and not a good customer for you.
Remember, the majority of prospects are in fact looking for value….and that should not be confused with a low price.
INSIGHT
When seeing a prospect it’s important that you get a clear understanding of what’s important to them. And why.
Having this clarity means you are able to position your products and services as being a perfect solution to them. That’s because it perfectly meets their needs and wants….and your price represents good value to your prospect and makes you a healthy profit.
By showing your prospective customer that what you do is the best option for them will increase the chance of converting them into a new customer……even though your price isn’t the cheapest.
FEAR 3 : Fear about what others will say
Let’s be honest none of us, if we had a choice, would pay more for something if we didn’t need to.
However, for your business to remain financially healthy so that it can continue to provide your customers with great products and services then the price charged can’t remain unchanged forever.
Good customers should understand that.
There will be a vocal minority who will make a lot of noise. They’ll complain about the price. They’ll moan about the quality of the products and service.
It’s not nice to hear.
BUT what business owners really worry about is the reputational damage that will be caused by the vocal minority. This is a real worry for many given how easy it is for anyone to maliciously write and post a negative review on social media.
INSIGHT
Focus on delivering great value and meeting the needs and wants of your customers. As long as your new price is communicated well and still represents good value it’s unlikely your customers will complain or say anything bad.
Try not to listen and be swayed in by the vocal minority who complain. They’re probably your worst customers and you’ll be better off without them anyway if they don’t pay the new price.
FEAR 4 : Fear that it's difficult and time-consuming
Many business owners put off increasing their prices because they say that either don’t have the time and / or it’s a difficult task.
In a small number of cases this will be the case but, even then, difficult doesn’t mean impossible.
For a majority though it’s, actually a lot less time consuming and far easier task than the business owner believes…or wants to believe.
It seems odd that some business owners are happy to spend lots of their precious time and money on winning new customers. BUT aren’t prepared to spend anything on increasing prices of their existing customers.
At the end of the day a price rise implemented today will start generating more profit and cash for the business straightaway….whereas it takes a lot more time to generate a sales lead and convert those leads into a new customer….
The secret is to be honest and say what the real reason is for not doing it.
INSIGHT
The most important thing is to start the task AND then continue to take action until everyone has had a price rise.
If the issue is genuinely time and difficulty then here are some tactics to help…
- Start with easy wins – getting some early success instils confidence and builds momentum
- Have a clear process – makes the price rises task a lot easier
- Bite size chunks – a big task feels more achievable if it’s broken down into lots of small tasks
FEAR 5 : Fear that you're not worth the higher prices
What often happens is that low prices will tend to attract poor and unprofitable customers. The impact for the business owner is not good.
The most visible impact being low profits, a dwindling bank balance and working long hours.
What is less visible is impact on the mindset of the business owner. They feel they are delivering great service and value to their customers except those customers frequently moan about the price and complain about the service they get.
Over time this constant moaning erodes the business owner’s confidence and the self-esteem.
…they get used to not making much profit and being unsuccessful and begin to believe they are not worth the higher prices that they should (& need to) be charging.
INSIGHT
It’s imperative to change your mindset – from one that is largely negative and downbeat to one that is more positive and successful.
Focus on the positive.
Some ideas to help do that include….
- What positive progress have you made lately in your business?
- What positive comments & feedback have you received from your customers?
- Ask customers for feedback and why they like doing business with your business.
- Get your customers to post testimonials to say how happy they are with you.
IN SUMMARY
Deep down lots of business owners know they should increase their prices BUT DON’T because they’re scared. They have one fear or another.
The good news is that in most cases though whatever that is fear is completely unfounded.
If you have not put your prices up it’s imperative to be honest with yourself as to which fear is stopping you increasing your prices.
By using some of the insights in this article it is possible to start to increase your prices.
Just remember increasing your prices is good.
Your bottom-line profit will increase
Your bank balance will improve.
You’ll be happier about your finances
……and as that all happens your confidence and self-esteem) will also grow
…. and you will feel so much better.
Important...
If you’re inspired to increase prices then you can discover more useful information in our article ‘How much should I charge my customers?
If you’d like to discuss any of the above or would like a chat to see how we can help drop us an email to wecare@krystal-clear.co.uk or call one of the team on 0161 410 0020.
