Thinking about price increases
Are you thinking about putting up your prices?
Charging the right price is part of running a successful business. You’re in it to make money. Yet so many business owners hesitate to charge realistic prices or to increase their prices. Here are a few tips to help you feel more confident.
Relax. You’re sensible
First things first. You’re sensible. You’re realistic.
So you’re unlikely to massively hike your prices in one fell swoop. The very fact you’re reading this means you like to consider things.
If you were going for a 20% increase you might like to make it a bit lower. But chances are, you’re only thinking of a modest increase? Remember, this is a normal and necessary part of running a business. So accept that you might need to increase your prices, and focus instead on how.
Think about who will pay higher prices
You might decide that you’re only going to increase prices to new customers. Or only to certain guests.
For example, you could write to your regulars and say if they book before a certain date, they won’t pay the higher prices.
Perhaps you’ll just increase prices at certain times of the year or week. Or you could offer a discount on longer stays or certain types of business, so your effective earnings aren’t too badly affected. Another option could be starting to attract slightly different visitors who're more likely to accept higher pricing?
Explain - when necessary
Most of the time you can just quietly increase your prices by a modest amount. Few people will notice. If your price increase is more significant or you have a lot of regulars who'll notice, you might want to explain a reason – such as fuel price increases or improvements you’ve made.
See below about being apologetic though. Sometimes an explanation can sound overly apologetic...
Show and tell any improvements you’ve made
Chances are that you’ve made some improvements to your business over the last year or so. Re-decorating, a new garden pond, some extra equipment or other small tweaks? Remember to mention these improvements on your website, or in your newsletter. Then, when you increase your prices, it will make much more sense. Introducing new prices isn't just about telling people about the new price. It's worth setting the context.
Show the value
There’s almost certainly an aspect of your service that you don’t stress enough.
It will be something you take for granted, but which others really value. That aspect could help you command higher prices and will help to make your customers even happier or more secure.
For example, perhaps you’re an activity provider with a lot of qualifications or experience? Or your bed and breakfast has great views from every window, which you keep forgetting to mention or show on your website?
Don’t start with the price
I notice that many people give the price (in person or on a website) before they’ve shown the value of what they offer.
Show images. Explain what you do. Demonstrate the value. Offer testimonials.
Then give the price.
If you start with the price, you have to work harder to justify why your price is right. Start by making people want what you have to offer, and then the price is almost a given.
Don’t be apologetic
I still remember the sales presentation someone gave to me when I was working as a tour operator. The sales woman from a swanky hotel had shown me photo after photo of their luxurious rooms and services. Interested, I asked the price. She hesitated and then answered:
“Oh, er… er, well the prices are quite high because it’s so luxurious. It’s er… er, £x a night”.
She couldn't afford a night in the hotel and thought the prices were overly expensive. So she felt apologetic when she had to talk about the prices. As soon as she started to hesitate about the price, it made me also question the value for money. Had she said something like, “it’s amazing value for all that luxury – just £x a night”, I’d probably have taken the price at face value (I was enquiring for my clients, not me!).
Be proud of your price and the value you offer. Sound (whether on the phone or in writing) confident, and there’s less chance others will question your pricing.
Think about the timing
Suddenly announcing a price hike mid-season doesn’t go down well.
Setting slightly higher prices for the coming year is far more acceptable. Set higher prices well in advance and then if you experience a lot of resistance you still have space to reduce them slightly if necessary. You'll also be able to build the foundations by talking about your improvements and value.