How to increase your prices without annoying your customers!

Inflation is at its highest for 40 years! The cost of doing business has skyrocketed and companies must decide how to offset the increased costs caused by supply chain issues, labour shortages, spiralling energy bills, and inflation.  

Many businesses will have no choice but to pass costs on to customers. The big question is – how do you increase prices without annoying, and possibly losing, your customers? 

The field services sector isn’t immune. Supply chain issues, rising petrol and transportation costs, and difficulties managing materials and parts shortages, are all very real issues.

How to tell your customers about a price increase

Obviously, price increases (even small ones) aren’t going to be welcomed by customers. That’s a fact. But landing a bombshell price increase on your customers without framing it or warning about it can do real harm to customer relations. At best it will annoy your customers, at worst you could lose the business.

While no one wants to hear about price hikes, especially when everything else is going up, there are ways to mitigate the impact when communicating a price increase to your customers. Try to:

• Frame it – when you tell your customers of a price increase, it’s important to tell them why. Most people are aware of the inflationary crisis but explain some of the specific issues you are facing in your industry. Customers will be more accepting if they understand why you are revising your charges. If the cost of specific parts are skyrocketing, be open and honest about it with your customers.
• Get the timing right – don’t land a price increase on your customers unexpectedly. Give customers advanced warning, so they can adjust. Sudden price hikes implemented without warning will lose you business. Announcing a price increase in advance might get you a flurry of business as customers book services in before rates go up!
• Communicate clearly – don’t beat about the bush. Hidden price rises will only annoy the hell out of customers when they eventually work it out (and they will)! Transparency and authenticity are everything. Call it what it is – a price increase, don’t try to cover it up as a revision of service contracts. It’s also an opportunity to reinforce your commitment to quality, which goes together with cost.
• Show some compassion – illustrate to your customers how you have taken every step possible to absorb increased costs. Show some empathy for the squeeze we all face. Shout about the measures you are taking to protect customers. And start your messaging by thanking your customers for their loyalty.
• Personalise your messaging – the expectation for customised services is growing and customer experience is now the most competitive battleground. Personalising your customer notifications and alerts is essential.
• Brief your customer services team – some of your customers will be annoyed no matter how you handle your price increase messaging. Be ready to answer questions by ensuring your customer service team and engineers are briefed.

How much should you increase your prices this year?

It’s clear to all that price increases are inevitable. But the big conundrum for businesses is how much to increase prices by. There are, of course, lots of factors. Keeping an eye on the market to stay competitive and having full visibility of costings are essential. Accurate costings across all areas of the business are critical for price setting to ensure the business is sustainable.

Stock control and investing in consignment stock as a hedge against future inflation is another possibility. This could help businesses weather the storm better and enable them to keep price increases to a minimum. Stock control software is no longer a nice-to-have, it’s essential.

Find out more about how inventory management software can help your maintenance business here. Wasting time on tracking and managing inventory is a cost you don’t need right now!

Another way to help minimise the effect of price increases on customers is to review service packages. Is there a way you can offer a lower price option with fewer features? Could your servicing schedule be extended without causing damage or safety risks? Or are you able to offer extra features to make customers feel they are getting something extra from the price increases?

These are all important points to consider.

Consider revising your payment options

Another way you can help to mitigate the impact of price increases is to consider whether you can offer different payment terms to your customers.

Joblogic, for example, via the finance provider Creation, enables businesses to offer different customer payment options. This is perfect for smaller and medium-sized businesses who want to be able to offer no-fuss payment options quickly and easily. Customers can spread payments over as long as 10 years. The transaction is dealt with directly between the customer and Creation and there is nothing for you to do.

Summary

All firms in field services and buildings maintenance are facing the same landscape. But what will set businesses apart is how they manage material price rises and shortages, maximise operations, absorb costs and minimise the burden that they pass onto customers. It means accurately calculating costs to minimise price increases and passing price increases on to customers without damaging customer relations and trust.

A lot will also come down to messaging. Creating a vivid and compelling narrative about the value of your services, illustrating your understanding of your customers, and demonstrating why and how you are increasing your prices will help to cushion the blow.

Business with outdated processes and systems are the ones most likely to fail. Don’t let your business fall behind the times. Joblogic’s field service management software can help your business be more productive, maintain accurate records, communicate effectively with customers, and ensure you keep your finger on the pulse with stock and costs. Digitise your way to success with Joblogic. Why not start your FREE trial now!