How to Get Consumers to Accept a Price Increase 

The external and internal factors weighing on businesses sometimes force them to adjust their prices. Communicating about this adjustment is not always easy, especially when it is a hike. This article explains how a company can make its customers feel more comfortable with a price increase notice. 

The Main Causes of a Price Increase

Some companies increase their prices partly because of growing production costs. In particular, if the payment for raw materials increases, the company is obliged to pass this hike on to its selling price.

Businesses may also raise their price to keep up with the competition. When they realize their price level on the market is well below the competition, they can be adaptive by readjusting their price policy. A higher charge can also be linked to improving the product or service's quality with more efficient materials and more advanced technology. 

You Can Lose $1,000,000 Trying to Win $1 

Regardless of the reasons for a price increase, it's never good news for the customer. For $1 added to the price of a product, a company can end up exceeding the price the customer is willing to pay. Thus, if a business finds itself in a market where its price is the key to success, it could lose a significant competitive advantage. The consequence of this will be to push the customer towards competition or substitute products. For $1, a business may as well lose $ 1,000,000 in the long run because the customers will choose its competitors. 

How to Get a Price Increase Accepted

The relationship that binds a client to a company includes trust and mutual respect. As soon as the client feels that one of these two elements is no longer at the center of the relationship, he or she puts an end to it. Communication is, therefore, crucial to maintaining this bond of trust between the parties. Particularly, telling customers about a price increase requires detailed plans from the marketing to the PR department, and companies have to explain their reasons for the hike.

The message should show customers that an increase was necessary for the business's survival or to improve the quality of the products or services offered. For example, Netflix sent emails to its customers to explain the increase in its prices with detailed items.

Sweet Tips from Ally:

No customer will ever welcome a price increase, especially during difficult times like these. Thus, it is vital to:

• Understand the customers through research
• Improve the pricing mechanism (price dimensions)
• Manage internal communication
• Manage external communication; then it can be possible to improve prices without upsetting customers.