266 | How to Communicate Price Increases to Your Customers with Katie Hunt
If you haven’t raised your prices in the last 6-12 months, it’s time for you to audit your product costs and pricing to see exactly what your profit margins are. It’s likely that costs have risen and your profit margins aren’t as high as they used to be. In today’s episode, I’m sharing a few approaches you can take to communicate your price changes with your customers.
Today’s episode is brought to you by my free Email Marketing For Product Makers Guide, where you’ll learn how to map out 12 months of emails in under an hour and learn more about strategies for wholesale and direct to consumer audiences!
The question that prompted today’s episode was from LABS member Jenny: “I need to raise my prices. How do you recommend going about a price increase specifically on the retail side? Do we announce it, explain why, or just do it? Help me not be afraid to raise my prices. Thank you.”
Price Adjustments and Increases for Your Product Based Business
When it comes to setting your prices or raising them, it is a very nuanced thing, as your business is going to look very different from someone else's business. The factors that you weigh when determining what to raise your prices to, how often to raise your prices, and when to raise them is going to vary greatly. If you're considering making that adjustment in your pricing, make sure you listen to episode 241 of Proof to Product to get more information on how to set your pricing.
Overcoming Mindsets & Concerns in Raising Your Product Prices
I want to encourage you to not be afraid to raise your prices—you’re running a business that is your responsibility to maintain profitability. Most business owners run into mindset blocks and fears that keep them from raising their prices. This could be a fear that no one will buy, that customers will think differently of them, and how they’re supposed to communicate an increase.
Reviewing the Data to Make Decisions
Your fears are valid as a business owner, but looking at the hard data can help you overcome the hesitation in raising your prices. Here are a few key data points to consider:
How much are you spending to produce your products?
How much does it cost you to produce one single unit?
Look at your profit margins—how much profit are you making per unit?
Sales data & revenue trends
It’s likely that your expenses have risen in the past year while your profit per unit has declined. This means it’s time to adjust your pricing or your production.
How to Communicate Product Price Adjustments & Changes to Customers
There are a variety of options for you when it comes to communicating your price increases! Let’s look at three different options and the pros and cons that go along with each.
You Can Raise Your Price without Any Fanfare
It is absolutely an option to simply log into your ecommerce platform, adjust your prices, and be done with it. You don’t have to say a word about your pricing change.
Pros: It’s simple and easy without any timeline or stress around it.
Cons: It limits the trust by not having open communication with your customers.
Host a Flash Sale
Another option for you to communicate price adjustments is to host a three-day flash sale telling everyone that your rates are going up on a specific date, but you can grab the current rates until then. In this flash sale messaging, you should:
Encourage people to purchase before a specific date.
Be clear on where and how people can order.
Pros: You’re offering customers a last chance to get the products at the current rate which will provide loyalty and a cash boost. With a short time-frame, you can be aggressive in your communication across platforms.
Cons: When it comes to cons, you will need a little time to prepare and create marketing assets to get the best results.
Flash Sale Tips: If I were running a 3-day flash sale, I would send one email each morning of the sale, then two on the last day (one in the morning and one a few hours before the sale ends). I would also plan one social media post per day at minimum on your most active platforms. Each of these should have a CTA to go to the shop and buy.
Do a Month-Long Campaign
Similarly to a flash-sale, you can give your customers a heads up that you’re updating your prices soon, yet you’re giving them a full month to snag the current rates. This month-long campaign will encourage customers to stock up.
Pros: It gives your customers a longer lead time to process the upcoming changes and make purchases. It also allows you to communicate clearly with more touch points.
Cons: Unfortunately, this is a long period to market a pricing update, which means you’ll need to work it into more than a temporary campaign. You may also feel the need to explain yourself more in a month-long campaign.
Tips: I would send at least one email per week with more in the final week.
Making Your Pricing Updates
Of these three different options, I personally recommend the 3-day flash sale. It communicates the change to build trust with your customers, yet the shorter lead time creates urgency for your customers to make a decision. If we give people too long to decide on something they often don't purchase due to indecision. This shorter time-frame also creates less work for you to prep marketing emails and the content on social media.
How to Communicate Pricing to Custom Clients & Wholesale
Now that we’ve covered how to communicate pricing increases to direct to consumer clients, let’s look at how to approach the custom project based clients and wholesale.
For custom project based clients, you should consider sending two emails that tell them about the adjustment and when it will happen with about a week of time that allows them to order under your current rates. On the last day, make sure to send a final email reminding them. In all of these emails, your CTA is to book now so that they’re paying a deposit or in full and signing a contract to secure that rate.
For wholesale customers, you can approach it similarly to how we discussed the direct to consumer method, but give them a week or two to purchase, because these are much busier customers with larger orders to plan for. In all of your communication, you’ll want to communicate any changes in product categories, products, and pricing.
If you enjoyed today’s episode, have questions similar to Jenny’s, or simply want to pick my brain, make sure to check out Proof to Product LABS, our group coaching program for product based businesses.
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Connect with Katie Hunt
Katie Hunt is a business strategist, podcaster, mentor and mama to four. She helps product based businesses build profitable, sustainable companies through her conferences, courses and coaching programs.
Website: prooftoproduct.com | Instagram: @prooftoproduct
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