19 Is a Price Increase Imminent? Considerations for Breaking the NewsJan 15, 2023
Join Suzanne Proksa on The Suzanne Show as she discusses the potential need for businesses to consider a price increase and how to do it in a way that is respectful and beneficial for customers. She provides advice on communicating the change, understanding customer needs, and creating additional content around results of product or service. Plus, find out about her limited client slots for 2023 in business and human resources!
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In this episode of The Suzanne Show, Suzanne Proksa discussed the potential need for businesses to consider a price increase and the importance of understanding why it is necessary. She emphasized considering external factors such as cost of goods, losing money, or feeling pressure from competitors. Additionally, she suggested putting oneself in the customer's shoes and asked if they can afford the change.
Furthermore, she advised estimating how much business will be lost as a result of the price increase and doing the math from there. She also suggested preparing for a price increase in business relationships by having an idea of who may not be able to afford it and considering if customers will feel resentful or like they are paying for something they did not ask for.
Finally, she recommended communicating months in advance and giving customers enough time to adjust their budgets accordingly. To ensure that customers are informed, Suzanne recommended determining which channels to use to reach them, developing content around why the change is necessary, creating additional content around results of product or service, and sharing participant takeaways after events in order to show value and impact.
Lastly, she encouraged people to think outside the box when raising prices by showing customers how it will benefit them financially despite record high inflation. Suzanne Proksa discussed the importance of giving customers a runway when it comes to price increases. She suggested providing advance notice, involving those affected by the decision in order to take in feedback, and apologizing and offering alternative solutions if customers cannot afford the increase.
Additionally, Suzanne Proksa is taking limited clients for 2023 in both business and human resources. She specializes in visibility, communication, getting the word out, mindset stuff, and strategic planning. Her pricing is not expected to be much higher than it was before her break. People can contact her via the contact link on her website or via Instagram messaging.
It’s no secret that the economy is a real challenge these days. I don’t need to share fancy stats to drive that home. Unfortunately, that puts many of us in a place where we have to consider raising our prices to keep up with component costs, supply costs, fuel costs, etc. Today, I want to talk about what you should take into consideration before increasing your prices and how to break the news as gently as possible if you have no choice.
If you don’t know my history, I have owned both product and service-based businesses. I’ve also been in the business world for 30 years. I’ve seen my fair share of price increases get rolled out. Some went well and some not so much. I’ve also got well over 23 years in HR which means I have a very good understanding of people and how they respond to unpopular topics.
Considerations – The “Why”
Before diving headfirst into the gnarly waters a price change can bring, it is important to consider your “why” behind it. Are external factors really forcing your hand? Are you losing money? Do you see everyone else doing it and feel the need to do it too? Or is it psychological?
The first thing I always think of when it comes to pricing is how it has been drilled into my brain to charge what I’m worth. People teach that a crappy mindset that keeps people and companies from raising their prices. While this is great in some instances when someone is charging $20 for something worth $200, it can be detrimental in others. If this is your driver, it might be time to consider whether now is the right time. Changing prices in record high inflation for this reason may not be a great decision.
Considerations – The Effect on Customers and Your Bottom Line
One consideration that seems to go by the wayside sometimes, or perhaps not given enough weight, is how this will affect customers or clients. Rolling forward with an, “it is what it is,” attitude may have some real negative implications for your business. Here are some things to think about when it comes to the effect on your customers. Put yourself in their heads.
- Have you already done an increase recently? Another increase in a short time frame could have customers concerned about your ability to strategize to control costs.
- Can they afford the change? Pay increases in 2023 are not going to match the inflation rate so people already feel behind and their budgets are squeezed. If they can’t afford it, you should plan on some people not buying from you any longer. Will your price increase be able to support the business you will lose? See if you can estimate how much business you will lose as a result of the change and do the math from there. As we talk about what I call, “the runway,” you may get a very good idea during that process of who is going to part ways.
- Are they going to be resentful and leave? Have they watched you spend wildly leaving them feeling like they are paying for something they didn’t ask to pay for? No matter what your why, this most certainly could occur.
- Is your brand promise to be affordable? Would this increase impact that brand promise? If yes, I would expect customers to seek another brand that keeps that promise.
Preparing the Runway
Assuming that you have determined that this price increase is a done deal or a must-do, you have an opportunity to prepare your customers for the change. Here are my tips to make this as smooth as possible with the understanding that price increases never bring joy to your customers.
First things first - start communicating months in advance if possible. Both companies and individuals have budgets and, in my experience, a budget change requires a several month period to ramp up. Obviously, we don’t always have that luxury especially if our suppliers don’t prepare the runway themselves.
Next up - Create a communications plan. This is a big deal. It should be promoted with as much, if not more, energy as that big launch in June. You are trying to keep customers, protect your brand, and not scare away future business. Having a strong communication plan with ample time scheduled allows you to hear customer concerns, respond with solutions, and plan for lost revenue.
- Determine what channels you are going to need to use to reach as many people as possible. Social media and email are only part of the equation.
- Develop your content around why this change is necessary so people are educated and not guessing. Social media is the wild wild west these days. People will talk but at least if they are coming from a place of facts, it helps.
- Create additional content around the results your product or service provides. This should really be a year-round endeavor but it’s never too late to start. People need and want to see the value of what you provide. Let’s say you do events as one of your services. While it’s great to promote that event you have going on, it’s even better to share participant takeaways after, number of attendees, the impact, etc.
- Loyal customers want to be part of the solution and all people want to know what’s in it for them. How does this price increase benefit them? Does the increase allow you to provide better products or services?
- Remember that email is not a communications plan in itself. Odds are great that your emails are going to land in spam or promotions if you are a Business to Consumer model. Gmail, Yahoo, and the like are famous for this. If you are Business to Business, if those businesses are using Gmail or anything similar you may have the same issue. With this being said, several emails should be sent focused solely on the price increase – with ample notice.
- Create open communications around the price change wherever and whenever your customers interact with you. Some ideas include signs on the door, signs at checkout, website announcements, scheduling pages, confirmation emails, thank you emails, order acknowledgements, website popups, in your SMS (text) campaigns/communications, etc. I recommend brainstorming a list of every place they have an interaction with you and go from there.
- Be sure to include an idea of what the increase is going to be. Netflix makes sure their new rates are no secret. Sure, people still complain but there is no secrecy. Remember, those who want to stick it out with you need to adjust their budgets if they can. If they can’t, this will allow them to shop elsewhere for their needs.
The goal is by the time the price change comes around, there are only a handful of people who are unaware.
Responding to Concerns
One thing I always say is when it comes to big decisions, involve the people impacted. As a society, we seem to struggle with this one no matter what the setting. Nonetheless, with a properly planned runway you will have time to take in feedback and possibly make adjustments if needed.
If you find that 50% of your customers cannot afford the increase, for instance, perhaps you can come up with another (existing or new) offer that they can afford and still keep them as a customer. All while not undoing your new pricing structure. Think of the, “I’m not able to do X, but here is what I can do,” model. Not only could you retain some customers but the relationship you build in the process can be very beneficial to both of you. Making people feel important and valued never goes out of style.
In the end, I think we can all agree that price increases are a very delicate process. If done as well as possible, it can make things much easier for all parties involved.
If you love what I’m throwing down, I am taking limited clients in 2023 in both business and HR. Contact me via the contact link on the website or via Instagram messaging.
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