Today we are going to learn how to increase our pricing. You know, not everybody is making a lot of money. So, let’s figure out how to do that.
Welcome to the Love of Business. I’m Crystal.
And I’m Sunshine. Let’s get to it.
Hey, Crystal, we get a lot of questions about, “How do I increase my pricing?” Can you give us some tips on how to do that?
Yes, I can. And I get this question a lot. This is one of my favorite topics because it generates immediate results. Now, there are three pro tips in order to increase your pricing, so your current customers don’t blink an eye.
You can only increase your pricing for current customers once every 12 months
Tip number one, you can only increase your pricing for current customers once every 12 months. If you do it more frequently, you will start upsetting some of your customers. And some will leave.
Give your customers a thirty-day written notice
Tip number two, you will want to give your customers a thirty-day written notice, via email, in person, a letter, whatever works best for your customers. So, they know a head of time and are not surprised or taken aback.
You cannot increase prices more than 10-15% across the board
Tip number three, and this is probably the most important tip out of the three. When you are increasing the pricing for your customers, you cannot increase them more than 10 to 15 percent across the board. So, make sure you do your calculations right on that one. Otherwise, you will have a lot of customers really upset and leaving, which is not what we want.
What do you mean you can’t raise your prices more than 15 percent? I’m still a little confused on that.
Sure. Let’s discuss. If you increase your pricing more than 15 percent, something psychologically happens in your customers mind and they get really upset, frustrated. And they don’t want to buy your product or use your services anymore because they feel gypped. And for a better, lack of words, they literally lose their minds. But if you stay within that 10 to 15 percent increase, no one bats an eye. And they understand that occasionally you’ll have to do nominal increases, once every 12 months, to give them the highest quality.
And let me just give you a quick example. Years back when Netflix would send DVDs via the mail, I think it was 2012, 2013, around there. They got a new CEO. And he increased that DVD mail service by 60 percent. Guess what happened?
I think a lot of people were pissed off.
Yes, yes they were.
And they lost a lot of customers, I’m assuming.
They lost a lot of customers to Blockbuster.
Oh, that’s right. Because they actually did mail order service.
Yup.
And then Redbox came along and all of that good stuff, which was only a dollar to rent from your grocery store. Imagine that?
The good old days.
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