The pandemic is why all businesses were forced to re-consider almost everything, from operations to staffing to customer experience. It’s been an enormous challenge, and many companies have lost revenue they couldn’t afford to lose.
But when the situation becomes more challenging, it is also a perfect opportunity to reexamine aspects of your business. First, review some policies that might have yet to be questioned. For example, perhaps you’ve been rethinking your tipping approach as more and more customers are doing pickup or takeout. Apart from that, there is a big possibility that you have negotiated some supplier agreements or streamlined other costs.
Moreover, the tail end of the coronavirus pandemic is the worst possible time to raise prices. Business needs to survive; if you’ve looked at your books and you need to increase your costs, there are ways to implement it without hurting your customers badly.
Here are seven strategies for successfully increasing your prices.
1. Plan ahead
It’s difficult to predict what’s coming in the next few years, considering all the uncertainty around the course of the pandemic. But it’s best not to raise prices twice in a short period. Instead, it is recommended to make a plan to get you through a worst-case scenario year in which labor and supply costs continue to rise, but consumers pull back on spending. Then, always remember to set your new prices at a level that will keep your business healthy for a year of uncertainty.
2. Study your competitors
Consider yourself a customer and research what other businesses in your area are up to. Think outside the box when it comes to considering your competitors. Are there independent stylists making house calls in your area who might lure customers from your salon? Could your customers get a meal-kit subscription as an alternative to takeout from your restaurant? Look at what all these competitors are doing on pricing—other local businesses may be raising prices, and many national chains are, too.
3. Prepare your staff
It would be best if you prepared your staff to handle questions about the price increase. You need to post a message on your social media accounts or your website, so it would be perfect if you talked to them and asked them to answer it accordingly. Moreover, you can give them talking points when customers bring up the issue. You may take a few minutes before each shift for a week or two to roleplay a conversation about the prices, so they should be prepared to answer in a friendly, upbeat way. And make sure you prepare your staff for the likelihood that a few customers will be angry and may even threaten to take their business elsewhere. Remind them of the usual best practices for handling difficult customer conversations.
4. Look for creative alternatives
During the early phases of the pandemic, some small businesses added temporary surcharges to cover new expenses like increased staff time spent cleaning or the cost of personal protective equipment. In addition, some restaurants added service charges to ensure staff was fairly compensated while customers were doing more delivery and takeout.
If you’re facing sharp price increases for certain supplies, look for ways you could avoid using that particular product or look to add a temporary surcharge to specific items. For example, beef, chicken, and pork prices are up about 10%, and many small restaurants are pulling pricier meats off the menu in response.
However, be aware that communication is key—a sudden new charge can backfire if perceived as opportunistic. Make sure new costs are clearly explained on your website, with signage in your store, and through staff communication with customers.
5. Don’t just raise prices. Revamp your offerings
A service business might add new, higher-touch packages with a higher price tag and some discounted packages for price-sensitive customers. A restaurant might introduce price increases along with a newly refreshed seasonal menu. If customers see that they have options and that you’re making an effort to keep your business up to date with changing trends, they’ll more readily accept a price increase. It is crucial to know that while it’s essential to be transparent about price increases and communicate with customers. Price increases may be easier to accept if they come with a fully upgraded menu of offerings.
6. Make sure your customer service is a top-notch
It is best to ensure you’ll offer your patrons great value considering your new, higher price points. Excellent customer service can help smooth over any problems that may come from higher prices and make your customers feel like they are getting great value for a modestly higher price. Look for cheap ways to create a premium experience through customer service or design elements that enhance your brand.
7. Plan to revisit the pricing issue in six months
No business doesn’t impose price increases, whether there is a pandemic, inflation, economic crisis, or product shortage. Therefore, it is even more crucial to keep checking your business key indicators and monitor how well your current price points are serving you. Always consider planning for the worst-case scenario and ways to keep your business strong. Then, keep checking in and reevaluating whether your prices are too high to maintain your margins.
