How can I raise prices on my existing customers without losing them?
We launched our startup initially with all inclusive one-price packages for our services. As we grow, our operating costs can no longer be covered with the current prices we have set. I want to make our packages more expensive, and then offer custom pricing for customers that might not need everything we offer in our packages. Should I only raise prices to new customers, or can I raise them on my existing customers?
The Business.com team recently published a guide to How to Set a Price for Your Service that can help answer your question.
I agree with others that if you have to raise prices on your existing customers, be honest with them as to why. For example, has the cost of materials increased and you don't want to compromise the quality of your product/service by using different materials? Share that fact with your customers. They will appreciate that you aren't jeopardizing the quality of your product/service to make more profit.
Also, make sure to research your competitor's pricing before setting a price and notifying existing customers. You can use competitor's prices as a benchmark to set your prices and avoid having to change your prices again if customers can find the same quality product/service at a lesser cost.
The guide above advises you to price higher than you think you should. What this means is don't' sell yourself short or be afraid to ask for what you deserve. Hope this helps!
A better way might be to raise prices on new customers first. Then when the new customers are firmly established then you could turn to your existing customers.
Announce the increase in value and fee at the same time.
Rosanna, sorry for the late response. It hard to be too specific without getting into details regarding the specific product, but I can give a bit more detail of what I am referring to. First thing is to do the market research, knowing your competitors, and be honest about where you stand relative to your competitors. does your competitor provide a more limited scope of services than you do? Do you have some endorsements from highly respected clients or industry associations that speak to the quality of work that you have done? Has your service stood the test of time - in other words, have you done work 10, 20 years ago where your recommendations have been proven right, and the customer has seen the on-going benefits? All of these things mean that over time, the customer will benefit by ensuring that their customers are more satisfied, or that their costs over time are lower. In my case, I have a few times managed to save my customers more money upfront through my recommendations and negotiations with their service providers than my services cost. I have provided services in these fields for decades and have a track record that I can point to and have a wider scope of expertise, this can help to ensure that things do not fall through the cracks as might happen if you need to engage a number of different consultants for different aspects of the project.
Well I take that you have a load of answers already to help you raise your products prices up. So the least I could do is to tell you not to worry on making such move the market can take it. Offer another feature and another value to the existing package for your existing users justifying the new rates while make it as one of the feature for the you package for new members w/ the new price, its better to have something to offer for increasing a price than increasing it w/o offering nothing at all.
Raising your products prices higher is a detrimental factor indeed as what one of the 4Ps of marketing often tells us but that will not always be the case, say Apple for instance, selling a computer may come as a cheap price but selling the things they can do w/ it, it helps them reach their goals and achieve their dreams is as expensive as any other luxury products in the market and that is LIMITLESS, Its all about setting up a tone and giving a strong value that influence your targeted audience behavior. Well I hope that helps!
with increased prices increase services you offer to your client in a bundle
Wow thank you for all the advice. You have contributed to helping me solve a sensitive subject to most customers- pricing. I look forward to reviewing this more.
An overall minor price increase that is announced with a brief but specific reason to your existing customers, and include a statement that affirms your appreciation for their loyalty, BEFORE you apply the change is best and helps retain them, as they see it as good faith. If you see opportunity to vary your pricing model and change previous packages or set collective rates, the timing would be best for one inclusive change. Maybe your best selling services adjust only slightly, other value-added services with less demand remain as is, this might actually help attract more use by it staying at the same present rate - market that.
Great question, Jacob for you and others. So many concepts and strategies. Pricing is just one of the variables in the nine P's of marketing. People or as you explain your "existing" customers is another.
Pricing is tricky. Both in the short-term and in the long-term. Add that you're a start-up and it becomes trickier. Actually your customers and the marketplace will set prices.
In my MBA classes if we boil down everything into two major points: you need to increase revenue and control costs.
Your product, product improvements, sales force and employees play huge parts in any price increase. As Management guru Peter F. Drucker once said: “The aim of Marketing is to know and understand the customer so well that the product or service fits him (her/it) and sells itself. Price is important in this equation. And this is one of the reasons I created the Nine (9) P's of marketing. “People” or Targeting was slightly forgotten in the Marketing Mix, and is a major, significant part of the Nine P’s of Marketing.
Companies do not get potential users or customers to try a product by convincing them to love their brand. You get them to love a brand by convincing them to try and use (continue to use/repeat sales) the product or service.
Developing a strong brand is a byproduct. It comes by executing and doing the elements/parts/things/variables/ingredients/components in the Nine P’s of Marketing... right. Make sure the Product or Service is excellent. Research and Planning excellent.
Be sure your company is taking good care of your customers (People), and having the right Planning and targeting (People), the right Product or Service, right Place or distribution, right Price (here it is again), right Promotion, right Partners, and the right Presentation, with the right amount of Passion in the 9P’s of Marketing. Here to help. All the best.
Definitely start by raising only to new customers. I would say use this as long as possible. In time, there may be a turn over. If you also need to raise to current clients, do so only after one year. The longer the customer, the less likely they are to leave as a result of the price increase. Raising the price to a relatively new customer will make you look like a bait-and- -switch artist.