I got our AT&T Yahoo! internet bill this week and noticed my rates had jumped. I was surprised … and that is not a good thing.
You never want your customers to be surprised by a rate or price increase. Pleasantly surprise them all you want with price decreases, but when you’re taking more money, up-front communication is key.
Since your business costs are rising, you’ll eventually have to pass that on to the consumer. You can, and should, make this transition as pain free as possible.
When you deliver bad news (a price increase) with the reasoning behind it (higher gas prices, labor costs, etc.) your customers are more likely to accept the increase as inevitable and reasonable. The absence of reasoning will annoy the customer and she will assume you’re just trying to squeeze more money out of your relationship.
Don’t pull a price increase out of thin air. Give your customers an advanced warning that changes are coming. Include the timeline of when changes will happen.
Lock In Previous Pricing
A price increase is a great opportunity to give your current customers a sweet deal. Give your current, and loyal, customer base the opportunity to maintain their current pricing by extending their contract or paying for some service in advance.
Open Communication Equals Retention
Once you notify customers of a price change, some may start shopping around for your competition. That is fine. If you really are providing a good service at a fair price, most of your customers will stick with you.
When you surprise customers with a price hike, even your loyal consumers will start to shop around. Why? Because they’re mad. It is a lot harder to retain angry customers.
So keep customers happy: communicate, explain, prepare, and smooth the price change transition.