7 ways to Increase Prices without Losing Customers

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Updated 9 years ago

1. Test a 10% Price Increase NOW!

This is the simplest thing in the world to do. Just put your prices up right now by 10% and see what happens. Common sense tells us we're going to see a sudden drop in sales, so you might be reluctant even to try it.

But, it's not like jumping out of a plane with no parachute: you can always drop them again if the results aren't favourable.

So today - right now infact - increase your prices by 10%.

The chances are you will lose no business, and even if you do, most businesses can afford to lose up to 22% of their sales on a modest price increase like this and still make the same profits, because most people won't even notice.

For example, if I want cheap paper for my printed "roughs" in my office, I'll buy the cheapest I can get.... yet even then I won't cross the street to save a few pennies: I'll buy the cheapest I have available at the instant I want it.

Furthermore, there are times when buying on price is mandated by law (as I believe, in the case of tendering laws enforced upon us by the European Parliament).

But even then, businesses routinely get round it by drafting the tender invitations in such a way that only the preferred supplier actually meets the requirements and so is the lowest price by default.

Here's how Elastic Price Really is!

A couple of year's ago a copywriter quoted for some work to an American client.

He sent off his quote by email, and it was for something like $2,500.

By return he got an email back saying "look's like it's $4,595.23 in USD at today's rate. That's fair. Go ahead."

The copywriter couldn't understand this until he checked his out going emails - he'd accidently typed "£2,497" instead of "$2497". Instantly his prices increased by 84%!

What it means, really, of course is he had undervalued his own worth. And the important lesson here is most of us do.

Remember 86% of people don't care about price.

And if you're worrying that your client's, customers, and prospects are worrying... then you're almost certainly worrying for no reason 86% of the time!

Why a Price Increase is So Valuable

Broadly speaking most businesses operate with something like a 35% mark up. This is not far wide of the mark for most businesses in most industries.

If your mark up is lower, then what I am about to show you will be even more beneficial; if your mark up is higher, it will be less so,but still worth doing because you are most certainly undercharging for your products and services.

You can skip the maths if you like, but I encourage you to follow it through at least once, because it's really important you understand this and don't just take my word for it.

It'll still work for you, of course, whether you understand it or not, but experience shows if you really understand it, you'll feel more comfortable about actually doing it.

Here's the bottom line: by increasing your prices by 10% with a 35% mark up - which is, remember, about right for most businesses in most industries - increases your profits by a massive 28.57% or so on the same volume of sales.

Another way of putting it is that you can increase your prices by 10% and have your sales fall by 22% and still make the same amount of money.

Let's see how.

Imagine you sell exactly £1,000 000 of products, and your profit on them is £350,000.

What this means is that for every £1 we make in gross income, we've spent 65p to buy or make the stuff and then to sell it, and we make a 35p profit on it.

Mow let's say you increase your selling price by just 10%.

So assuming for the moment you don't lose any sales, instead of selling £1,000 000 of products you're now selling £1,100 000 in products.

And that extra £100.000 is pure extra profit.

Now your profit is £450,000 instead of £350,000, an profit increase of 28.57% for no extra work (because the profit increase of £100,000 is 28.57% of £350,000)

But what's the real upshot of all this?

Well, let's assume we lose sales because of the price increase.

How many can we lose before we start actually losing money?

Working out the maths shows you can lose 22.2% of your sales and still make the same amount of money.

However, experience clearly shows we don't actually lose any sales at all. Price increase of just 10% gives you a 28.57% price hike in profits.

Or another way of looking at it is to say you can afford to lose 22% of your sales and make the same income! That's the difference between finishing work on a Thursday and working through till Friday afternoon.

I think that's a good deal, don't you?

So just do it, as they say.

Put your prices up and see what happens.

You will lose virtually no business and your profits will soar.