One of the biggest challenges that business owners face is knowing when to raise prices. Most of us are hardworking entrepreneurs that eat, breath, and sleep work. It makes sense that all of the blood, sweat, and tears that we've poured into our business should yield more of a profit over time. But does it really make sense to raise prices if your product hasn't improved?
The Danger of Raising Prices Without Providing Additional Value
If you raise your prices without providing additional value, you risk losing customers. To demonstrate this, let's say that you've been paying $35 for a monthly carwash pass for the past three months. You then receive a notification in the mail that your monthly rate will be increasing to $50 for the same carwash pass. That's a 43 percent increase in price, and you'll be getting nothing additional in return. As a consumer, this price increase will lead you to take your business to the competing carwash up the street, right?
In this scenario, if an additional perk such as a hot wax was added to your carwash, you may be able to see merit in the price increase. However, simply hiking the rate without improving the service is a turnoff.
This example should be a lesson to all of us that we shouldn't raise our prices if our products haven't improved. Yes, it's easy for us to justify raising prices over time due to the rising cost of doing business. However, you need to avoid this temptation at all costs. You owe it to your customers to not raise your prices until you've made your product or service better.
The Value of Doing Right By the Client
I talk a lot about doing right by the client, and that's something that our team at New York Ave firmly believes in. Operating with this philosophy has allowed us to earn loyal clients over the years and earn a credible reputation in our industry. We're a brand that our clients can trust, and that's worth a lot in today's uncertain world.
Because we stand by our promise to do right by the client, we don't raise our prices at New York Ave for the sake of raising prices. Instead, until we can justify to the client why our product or service is worth paying more for, we won't pass along extra costs to our clients.
When a Price Increase Could Be Merited
Let's use a pest control company to show an example of when a price increase could be merited. The pest control company has historically charged a flat quarterly fee to rid clients' homes of bugs and other unwanted pests. The company has recently started to use a new formula that is stronger and more effective at preventing pests, and they're willing to offer a satisfaction guarantee. The pest control company can justify a rate increase to clients because they're using an improved formula and are willing to offer a satisfaction guarantee.
When it comes to determining whether a price increase is justified, you need to put yourself in your customer's shoes. Would you see the value in paying more for your product or service or would a rate increase cause you to turn to your competitor?
Figuring out when and how to raise your prices is a delicate matter. This is a challenge that many small businesses are faced with, particularly those that are service-based. Whatever you do, don't raise your prices over time and blame it on the cost of doing business. Instead, find a way to justify how your increased cost will benefit the customer even more than before. You'll always come out on top when you put the customer first.
If you raise your prices without providing additional value, you risk losing customers. To demonstrate this, let's say that you've been paying $35 for a monthly carwash pass for the past three months. You then receive a notification in the mail that your monthly rate will be increasing to $50 for the same carwash pass. That's a 43 percent increase in price, and you'll be getting nothing additional in return. As a consumer, this price increase will lead you to take your business to the competing carwash up the street, right?
In this scenario, if an additional perk such as a hot wax was added to your carwash, you may be able to see merit in the price increase. However, simply hiking the rate without improving the service is a turnoff.
This example should be a lesson to all of us that we shouldn't raise our prices if our products haven't improved. Yes, it's easy for us to justify raising prices over time due to the rising cost of doing business. However, you need to avoid this temptation at all costs. You owe it to your customers to not raise your prices until you've made your product or service better.
The Value of Doing Right By the Client
I talk a lot about doing right by the client, and that's something that our team at New York Ave firmly believes in. Operating with this philosophy has allowed us to earn loyal clients over the years and earn a credible reputation in our industry. We're a brand that our clients can trust, and that's worth a lot in today's uncertain world.
Because we stand by our promise to do right by the client, we don't raise our prices at New York Ave for the sake of raising prices. Instead, until we can justify to the client why our product or service is worth paying more for, we won't pass along extra costs to our clients.
When a Price Increase Could Be Merited
Let's use a pest control company to show an example of when a price increase could be merited. The pest control company has historically charged a flat quarterly fee to rid clients' homes of bugs and other unwanted pests. The company has recently started to use a new formula that is stronger and more effective at preventing pests, and they're willing to offer a satisfaction guarantee. The pest control company can justify a rate increase to clients because they're using an improved formula and are willing to offer a satisfaction guarantee.
When it comes to determining whether a price increase is justified, you need to put yourself in your customer's shoes. Would you see the value in paying more for your product or service or would a rate increase cause you to turn to your competitor?
Figuring out when and how to raise your prices is a delicate matter. This is a challenge that many small businesses are faced with, particularly those that are service-based. Whatever you do, don't raise your prices over time and blame it on the cost of doing business. Instead, find a way to justify how your increased cost will benefit the customer even more than before. You'll always come out on top when you put the customer first.