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10 Dos and Don’ts when implementing a price increase

A recent report by the CBI indicated that over 80% of its members were going to increase prices this year.

10 Dos and Don’ts when implementing a price increase

Perhaps you’ve been thinking about increasing prices too and wondering what the best approach might be. To facilitate this, here is my list of dos and don’ts to help you implement a successful price increase.

What you should avoid doing:

  1. DON’T apply a flat % price increase across the board – it’s a blunt and crude approach. It’s far more effective to work out a specific price increase for each product you sell.
  2. DON’T wait 3 years before making a price change and then ask for a significant increase. Far better to do it regularly with smaller amounts.
  3. DON’T use any negative language in your price increase communication, such as we apologise or unfortunately. Focus on the positive reasons why customers should continue buying from you.
  4. DON’T assume that if a customer objects to your price increase, that the price is the problem. Price is never the problem!
  5. DON’T let fear hold you back from taking any action on prices. If you fail to regularly improve your price position, you will be going backwards in terms of your profitability (and this will only continue to worsen).

Successful businesses do the following instead:

  1. DO ensure you give your customers at least 30 days’ notice, and preferably more (2 months is even better). My tips on How to write a price increase letter, will help.
  2. DO get into the habit of applying your price increases at the same time every year, e.g., 1st January / 1st April / 1st September.
  3. DO plan your price increases at least one quarter before you intend to implement them. So if you plan to apply new prices from 1st January you need to work out your plan in September.
  4. DO use a price increase as an opportunity to find out what your customers really think of you. Learn to distinguish between their price objections and the value they get from you.
  5. DO work out the financial impact of losing any customers. Are you better off with 100 customers paying £25.00, or 97 customers paying £27.00?  You may be surprised.

If you found this helpful, listen to my podcast with John Ray in The Price and Value Journey where we discussed a range of strategies that businesses can use to help increase prices successfully.

If you would like more advice on pricing for your business please contact Mark Peacock at PriceMaker.

If you want to contribute to the Chamber blog, contact us on marketing@molevalleychamber.co.uk