It should be easy to raise your prices whenever you please, right? Unfortunately, the truth is much more complicated as you run the risk of catching your most loyal customers off guard. However, careful planning and consideration go a long way in this situation. By assessing a range of complex factors, you can come up with the perfect answer to a range of stressful questions.
What price makes sense? How mad are my customers going to be? Will raising my prices end up destroying my business? Don’t worry, we know that increasing your fees is a worrying time for any business. But with the help of this detailed guide, we can make sure you don’t hit any avoidable stumbling blocks. Once you reach the end of this article, raising your prices without pissing off your customers won’t feel so hard.
1. Pick Your Moment
Choosing the wrong time for a price rise is a surefire way to ensure your customers head straight for the competition. But putting plenty of time and effort into figuring out the best time to increase your rates is one way to avoid any calamities. Many owner-operators simply choose to do so at the beginning of a calendar or financial year because this feels logical to customers.
However, a few other periods throughout the year also allow tradies to take full advantage. The best time to build a house in Australia is during March or August due to the typically mild weather, so these stretches where demand skyrockets provide an opportunity to raise prices. Meanwhile, Australia’s brutal summers mean that HVAC tradies can charge higher rates when people desperately want to escape the heat.
Outside of seasonal changes, numerous other green flags signal that it might be a good time to raise prices. If business is booming and you’re struggling to keep up with demand, it makes sense to up your fees as you can afford to drop penny-pinching customers. Another telltale sign that it’s time to raise your prices is when customers constantly remark about how cheap your services are.
Although it’s good to maintain relationships with your most dedicated customers, sometimes all the signs say it’s time to commit to a price rise.
2. Increase Value, Increase Prices
While you won’t find many customers rejoicing about the news of a price rise, having a careful plan to roll out fresh rates limits the amount of pain experienced by your customers. In fact, loyal customers can overlook the changes entirely if you raise prices slowly over time rather than all at once. For tradies who offer multiple services, a smart strategy involves increasing the cost of their least popular jobs, as the majority of customers won’t notice the change.
With the right approach, justifying any reasonable price rise is possible. Many owner-operators turn to value-added services that make the new deal seem like an even better one than before. For instance, tradies can offer long-term or first-time customers special discounts that help validate your slightly higher price when they return in the future. You may also consider forming strategic partnerships with other tradies to provide a discounted bundle service.
Alongside these value-added ideas, simply focusing on great customer service is another way to defend your prices. Whether you’re good for a chinwag, offer plenty of free advice or make it easy to book your services online, doing the basic things right ensures a price rise won’t cause your business to blow up in your face.
3. Planning Makes Perfect
Let’s face it – unless you’re the Don Bradman of tradies, raising your prices will probably hit a few customers for six. But you can avoid an endless supply of angry phone calls if you prepare your business with a comprehensive plan. One of the worst things that can happen to your small business is that an onslaught of disgruntled reviews starts peppering your social media pages, so draft a carefully worded response to use if things get out of control.
We don’t want to scare you out of making a change, but having a contingency plan is a good idea if your clientele really runs for the hills. Like many high-profile business dramas over the years, you can always revert back to the old pricing because your customer base has gone berserk. However, you also have the option of seeking out a different demographic who is willing to meet your price. Keep in mind that this option depends on your location and the services on offer.
Although you probably wish you could raise your prices multiple times a year, not many customers will tolerate that. This is why as soon as you complete one price rise, you should be thinking about when the next one can be justified. Whether you find ways to add even more value or simply have to increase prices due to surging demand, never feel ashamed about getting paid your worth.
Boost Your Bottom Line
Although tradies would ideally be able to raise their prices whenever they want, responding to customer expectations and shifts in the market is just part of the job. However, the three factors that we’ve outlined in this article ensure that you can get paid more without sending your business into a spiral.
First, remember that timing is critical. Just as you might blow a gasket if your favourite pub decided to charge double for a beer when showing the footy, think about how your customers will react to the timing of your price increase. Look to pick a moment when customers will be more comfortable paying a higher price or at least have a logical reason that explains your increased fee.
Next, justifying a more expensive rate is far easier when you add extra value at the same time. Generate attractive discounts, form mutually beneficial partnerships and improve the way you handle customer service. If successful, clients won’t mind a reasonable price increase.
Lastly, having a detailed plan is the best way to steer clear of a catastrophe. Come up with a strategy to adequately handle customer complaints and be prepared to search for more clients as some may find another tradesperson.
Raising your prices is undoubtedly a daunting prospect, but getting paid your worth is one of the best feelings in the world. Alongside these tips to increase your rates, FieldPulse makes it easier to operate your service business.
Rise above tedious admin tasks and organise everything on the go with our handy business management app. You can keep track of clients, schedule jobs, send invoices and much more. Schedule a free demo to discover how FieldPulse will save you time and money today.