The way to increase prices without losing customers is by fine-tuning your perceived value. Not sure what that means? Keep reading!
One of the more obvious ways to earn more money is to simply increase your prices. Make sense, doesn’t it? The only problem is that most small business owners are afraid to do this because they don’t want to alienate loyal customers.
That is where perceived value comes in.
When you leverage it, your customers will feel like they are still getting a huge value, even if they are paying more. In this guide, I’ll show you how to raise your prices while keeping your customers happy – it can be done!
What Is Perceived Value?
This is a marketing term that describes how customers see the merits of a product or service and its ability to meet their needs, especially compared to competitors.
This means that if your company or business has a high perceived value, then you will have a higher chance of being able to charge more than someone with a lower perceived value.
How Perceived Value Can Help You Earn More Money
When your customers feel like your services or products are meeting and exceeding their expectations, they will be willing to pay more money for them. When you do the math, this means you will earn more money, even if you don’t sell more products.
Here’s how that math works.
Let’s say you’ve been coaching at $100 per hour and currently work with 7 clients per month.
$100 per hour x 7 clients per month = $700 per month.
If you raised your rates to $150 per hour and work with the same number of clients, then:
$150 per hour x 7 clients per month = $1,050 per month.
You’ve just increased your revenue by $350 per month!
How To Check To See If You Are Undercharging
Are you charging enough for your services? Lots of people intentionally set low prices in hopes of attracting customers. This can also be due to low self-worth.
I highly recommend reading through How to Price Your Services and Get Paid What You Deserve because it explains how to price your services accurately and charge enough to get what you deserve!
Free E-Course: How to Earn More
I’m a big believer in helping my clients work smarter instead of harder. If you are looking for even more ways to increase your bottom line without lengthening your workday, check out my free e-course!
How To Tell Current Customers About Increased Prices
I get it. One of the most nerve-wracking things small business owners face is the conversation with current customers about increased prices.
What if they get upset? What if they leave?
All those fears are understandable, so I’ve made it easy with 4 different options to choose from. I’ll even share some verbiage that you can use in emails to your current clients.
Option 1: Grandfather Them In With Original Price
The easiest option is to just keep them at the original price. Then, you can just apply the new prices to new customers!
This is my least favorite option because I feel like you could be missing out on potential income. However, it might be important if you have customers that are resistant to change or are looking to save money.
In this case, you’d tell them something like this.
Just a quick note to let you know that on January 1st, my prices will increase to $X.00. You will soon see the new prices posted on my website and social media channels.
I appreciate your loyal support, so you will be grandfathered in and stay at your current price. If you tell your friends or other colleagues about my products, please tell them about my current price since your rates won’t apply to new customers.
Thank you so much for your loyalty,
Option 2: Set A Time Limit
I prefer this option since it still allows you to raise your rates, keep your customers at their old rates, and ease them into the higher prices.
If you set a time limit, it will give them an opportunity to see why you are worth the price increase without it coming as a huge surprise. Giving them some sort of notice is better, especially written communication.
I had a local small business owner that gave over 3-6 months’ notice, so it wasn’t a surprise when it happened.
Here’s how to phrase this:
Exciting news for Business Name! Due to our improved customer service and newly-established knowledge about TOPIC HERE, our prices will increase on January 1st.
We appreciate your loyal support, so your previous prices will stay the same for the next 6 months! Thank you so much for being such a joy to work with. In six months, your prices will increase to the new current rates.
Please let us know if there is anything we can do for you.
Option 3: Leverage Perceived Value
This is definitely my favorite option because it’s the strongest choice, and it has the potential for the best income growth for you.
Write down why you are increasing your prices.
- Do you have more knowledge?
- Are you newly accredited/certified?
- Do you have accomplishments that set you apart from your competitors?
- Are you including bonuses and additional items with your offer?
People experience perceived value in the emotional sides of their brains. This is why some brands are able to increase their prices when all they’ve changed is a new bottle or logo.
Don’t feel like you have to defend your reasons for the price increase. Instead, express it in a way that they can’t refuse and gets them re-excited about working with you.
For example, if your services and talents are in high demand, that should tell you that your customers have a high perceived value of what you do. Tap into your accomplishments and use them as examples of why even an increased price is still a great deal for them.
Here’s how to let current customers know about the new prices.
Exciting things are happening at Acme Company! After working for X years and bringing success to loyal customers like you, our prices will increase slightly. On January 1st, our new rates will be $X.00.
Thank you for your loyalty and for being so wonderful to work with. We will continue to exceed your expectations and crush the competition!
Option 4: Allow Customers To Leave
Finally, you just have to have confidence in your abilities and don’t be afraid to lose customers. Don’t beg for them to stay, allow them to leave. When you increase your rates, you will attract more of your ideal customers and less of the people who just want the cheapest product or service they can get.
You always want to tell your loyal customers how much you appreciate them, but don’t allow the fear of them leaving to hold you back from earning what you deserve.
Banish the anxiety that is holding you back from setting your rates higher. Believe in your perceived value and you’ll attract more customers that believe in it too!
Earn More Money By Increasing Prices
Increasing prices by leveraging perceived value is one of the best ways to earn more money. It all starts with having confidence in yourself and the products/services you create. When you believe in yourself, this confidence will transcend to your customers and they will be on board through the price increase.
Don’t be afraid to let some of your current customers leave. This will free up time for new opportunities and making the money that you deserve.