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Last week, I talked about raising your prices for new clients while keeping them the same for older clients, and I got some questions on that, so I thought I’d dig into how to do that.
First, a little caveat: this may not work for all businesses, but for many businesses, it does. For example, a service business like mine or a business like a landscaper, you can continue to charge your old customers whatever you’re charging them, $100 a month, $1000 a month, while offering your services to new clients for $150 a month or $2000 a month, however much you need to raise your prices. In certain kinds of businesses, you can also let your existing customers know that you’re going to be raising your prices and allow them to lock in the current price for a certain amount of time. If you’re selling goods, they can buy or commit to buying at the existing price while the prices increase for everyone else. If you’re selling services, you can ask them if they want to commit to a longer contract at this existing price, knowing that, that the price is going to go up for everyone else.
If you’re something like a restaurant or a retail shop, it’s a little bit trickier to do. However, there are many ways to reward your clients with loyalty programs and other kinds of discounts for long-term clients. One thing that I want to caution you against doing is if you have to raise your prices, say you have to raise your prices from X to Z. I would not go from X to Y to Z because then you’re raising your prices twice. Your customers have two opportunities to say they’re raising their prices and get annoyed at it. Just do it, bite the bullet, get your prices to where you need to be, and move on with your life.
I’ll be back next week to talk about how to figure out what your margins should be. So if you’re interested in catching that video, make sure you subscribe to my YouTube channel (https://bit.ly/3U8AEmb). I’ll see you next week with a new Fiscal Fitness Tip of the Week.