I read a recent article, Five Painless Ways to Raise Prices this Year from Entrepreneur, that described how a lot of small businesses were planning on pay raises this year. The article gave some strong statistics from a study that 43 percent of small businesses raised worker pay last year and 42 percent said they plan to raise it this year. The thinking for the raises in the article was that many workers hadn’t had a raise in several years and as the economy slowly improves now might be the time to give increases to keep good employees.
The problem is how to pay for those increases, and a quote from the article describes two ways.
“Unless they’re crazy, those business owners probably also plan to either simply sell more units or raise their prices in the coming year to cover that added payroll cost.”
The article then gives these five ideas to make a price hike more palatable for your customers.
- Phase it in.
- Offer valued-customer discounts.
- Revamp or repackage old products or services.
- Introduce new products.
- Review and retool you product assortment.
I know that the first idea seems to work the best on me. I tend to be a bit of a procrastinator, so if I know a price increase is on the horizon it can give me the extra incentive to make the purchase now since I can convince myself that I’m really saving money by purchasing now. The small business owner can also make the point that any price increase is out of their hands, it is their supplier or some other factor beyond their control that is reason for the change.