Thursday

If You Raise Prices, Do You Lose Clients?

Everything is costing you more. Fuel prices, supplies, materials, labor. To stay in business, many are going to have to raise prices. How do you do that without losing business? There are ways to do it so you don't lose existing and potential clients.

First, you must accept that if your pricing changes, you're going to lose some business. In tough economic times, many simply don't have the money to pay more. Those customers will need to be replaced and may come back in better days.

Next, you need to provide ample warning to your existing clients. Calling or sending out a newsletter, email, or flyer to let them know is a great way to keep them in the loop. Consider that you could use this as an opportunity. Since pricing will be going up, you could give them time to "get in" at the old price to save them money. At worst, it keeps your business name in their minds.

Also, you might consider baby steps. Instead of a massive one-time price increase, perhaps you could raise prices in small increments over time. 3 or 4 "nudges" in costs could be better than one big push.

Finally, you should explain the reasoning for the price bump. You don't have to open your books to them, but let them know that material costs, labor, and oil increases are killing your margins. Let them know you're not being greedy, you're being practical.

As with everything, try to do some research. If you're not offering one-of-a-kind products and unique services, you're not going to be able to raise prices higher than your competition. Price yourself too high and you'll go under.