Since I started a year ago I have been selling my product at low margins to get it out into the marketplace. Now I feel that the product is worth more. How do I raise prices without upsetting regular customers and losing their business?
It’s always a challenge when you enter the marketplace with a low margin to generate business. There are a couple of suggestions I can recommend though, as I have had a few clients with this exact challenge.
I am confident in the one year you have been trading, you would have received some great testimonials about how great the product is and most importantly the benefits your clients have gained as a result of it. Use these testimonials in all correspondence with any new customers, which will instill confidence in them and they will be more than happy to pay the price you feel your product is now worth.
Now in order to raise your prices with your existing client base and avoid upsetting them, they will expect something EXTRA in return for the increased price; irrespective if you feel your product is worth more than a year ago. What you need to think about is what you can give away as an extra value which is perceived as high value to your existing clients and something that costs you very little. As an example; as the owner of a sales training company, I have raised my prices and in return have provided Skype calls with the sales managers to help them with any ongoing challenges they had with the sales team that I trained. I have delivered a 30-minute webinar for a couple of months to refresh the team and give them the opportunity to ask me any sales questions. The only cost here is my time and it allows me to charge my clients what I feel my training is worth, not what I charged 8 years ago when I went to market.
The existing clients that you have a great relationship with; I would suggest having a conversation with them face to face if possible. Honesty is the best policy; I’m sure if you explain the situation that you cannot afford to charge what you did when you entered the market, they would respect you for that. Unfortunately, it’s inevitable you will lose some clients along the way, however, as you grow and gain new clients, it will allow you to cherry-pick who YOU WANT to work with, rather than who you NEED to work with.