Price increases can be an extremely touchy subject in many businesses—small or otherwise. While they are inevitable and you will likely have to wrestle with how and when and what to do regarding a price raise at some point or another, figuring out how best to go about it can be tough. One thing to be extremely careful of, however, is too large of a leap or too big of a price increase.
I have recently been working with an organization that raised prices on a certain service by 150% in the course of one month. Something that had cost $250 for years suddenly went up to $600. This is such an incredibly steep and shocking price increase that even if it is necessary or justified, it is so off-putting and overwhelming as to be a questionable business decision.
So, what happens when you make such a huge price increase? You can be sure of lots of complaining, loss of business, wounded reputation, etc. IF such a big price increase is necessary, it is important to give your clients and customers plenty of warning, explanation and do your public relations work up front. This is not like the “rip the band-aid off quickly” philosophy—your clients and customers have budgets too and many cannot easily absorb such a massive increased expense very easily.
Many businesses choose to “phase in” a large price raise over several months. This gives customers time to adjust and shows that you are considerate and concerned about them while trying to take care of your business. Whatever price raise you make, you should be prepared to justify and explain it to your regulars—they will want to know why, if and after they have been such good and supportive customers—they are being asked to pay more?
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