It may be impossible to predict the outcome, but one thing is for sure: if you fail to examine your costs and pricing periodically, you could be cheating yourself and your employees of financial security.
As you consider a price increase, take some time to examine the marketplace, your industry norms and the quality of your products and services to make an intelligent decision.
Manage Your Business Efficiently Raising prices is only one way to increase profitability.
Consider management improvements that may boost the bottom line immediately.
Look for inaccurate billing, high accounts receivable, workflow bottlenecks, high employee turnover, and poor cash flow predictionsWith improvement in these areas, it may be possible to minimize the need for a price increase.
Be Mindful of Your costs and Price Accordingly The price of your products or services must reflect a realistic calculation of your costs.
If your costs have gone up but your prices haven't, obviously you are working just as hard but making less money.
Examine the costs of labor and overhead.
Are you confident that your pricing reflects industry realities.
Compare Your Company to the CompetitionHow do your pricing model compare to your competitors' prices? If your cost and free structure are significantly lower for a product or service of comparable value, make an adjustment.
If your pricing is higher, you must be able to communicate the additional value received for the higher pricing.
If you cannot make a clear justification, you should not raise the prices until you can! Consider The Quality of Your Offering.
Inevitably, quality determines price.
You may lose sales to competitors if your price is too low.
Prospective customers may assume your quality is lower if you price seems too good to be true.
However, if you have invested in quality improvements without raising your price, you may be leaving money on the table.
If you offer a better value of service than your competitors, at a much lower cost, this is the time to make the change in price.
Just do it! If it's clear to you that a price increase is justified and required, just do it.
Depending on the nature of your business and your relationships with certain customers, you may want to provide advanced notice of a price increase.
If you do notify them in advance, be sure you know how to explain the reasons for the change.
Do not get defensive when you receive the push-back that will come with the increase in pricing.
You are not doing anything wrong.
Price increases are a fact of life, an honest response to increases in costs or quality.
Long-term satisfied and reasonable customers will understand.
If they truly are upset, you may not have the type of relationship you thought you had established.
In every industry - there's always someone cheaper.
Customers who are looking for lower prices can find them easily enough.
Remind clients that they cannot find the same level of quality, service, and dependability elsewhere at your price.
Many times those customers will leave you for a short while, only to return when they have found that lower pricing usually means a lessening in quality or performance.
When increased costs or improvements in quality justify a price increase for your business occur, you have to raise the pricing.
Your long-term ability to service and provide value to your customers is very significant to continued growth and success.
Most customers truly will understand your decision and respect you for it.