Article written by Graham Fitzpatrick, Business Advisor, Western Sydney Business Centre.
When was the last time you increased your prices? The reality in that in this current climate you need to review pricing now rather than later, to stay on top of your costs. Increases in demand, supply chains shortages, increases in utilities, insurance and transport costs are all factors that are having an impact on your bottom line.
But don’t get carried away and start increasing prices left right and centre as you cannot afford to lose customers in the process. There are a number of ways to increase your prices while reducing the impact on your customers.
Competition based pricing is a one in, all in approach that we normally see across industry groups. For example, Health funds will all increase prices all at the same time.
Cost Price Plus, consists of taking your cost price and adding an increase on to it. This is where a percentage is added on top of the cost to produce an item. These increases can take the form of delivery or transport costs, as well as booking or service fees.
A Premium Pricing Structure involves marketing your products or services in a way where they seem to look and feel expensive in a way that justifies the high price tag.
Project Based Pricing sees you fix the cost of your service while increasing the price of things like labour costs or set up costs for products.
Bundling involves packaging up separate products together and offering them under a single price point to increase customer spending.
Another option is to increase prices for new customers only. This protects your current clients and can be used as a way of rewarding them for their loyalty.
Once you have decided on the right price strategy for you, the next step is to introduce the new prices to your customers. The best way to do this is to advise them in advanced. Justify the need for the price increase while reminding them of your commitment to quality and service. Also make sure that everyone in your business is aware of the new price increase. It also will help if you ensure that customers can contact you to re-negotiate.