From being honest with your customer base to emphasizing the value you bring, here are six answers to the question, “Can you share your best tips for how a startup can raise prices without losing customers?”
- Provide Transparent Reasoning Behind It
- Showcase the Added Value Customers Will Receive
- Highlight Your Product Roadmap
- Lock in the Original Rate
- Introduce Tiered Pricing
- Boost the Perceived Value
Provide Transparent Reasoning Behind It
Before raising prices, a startup needs to communicate the value of its products or services to its customers. Providing transparent reasoning behind the intended price increase, such as an improved product or an increase in costs, can help customers understand and accept the change.
Additionally, offering a grace period before the price increase takes effect, or providing existing customers with a loyalty or rewards program, can help to retain their business. Startups need to find the right balance between pricing and value while keeping in mind the impact a price increase may have on customer loyalty and retention.
Brenton Thomas, CEO, Twibi
Showcase the Added Value Customers Will Receive
Your customers will be more likely to accept your decision if they see the extra value they’ll get from it. For example, you could offer additional features or services that weren’t included before and make sure these extras are clearly outlined. Stress that the price increase isn’t just about making money, but rather about providing a better product or service.
Of course, this isn’t always enough—you should also back up your claims with facts and figures. Cite customer testimonials that show the value provided by increased prices. Doing so will help customers understand why the cost increase is worth it and can even encourage them to pay more willingly than before.
Gary Gray, CFO, CouponChief.com
Highlight Your Product Roadmap
Customers aren’t price-sensitive; they are value-sensitive. Although no one enjoys price increases, if the value has significantly increased, then a price rise will seem inherently justified.
By highlighting your product roadmap alongside any pricing updates, you show clients how your product has improved throughout their subscriptions. This reassures clients, letting them know that the price has increased in response to greater value and isn’t merely arbitrary.
Additionally, by showing future improvements and feature additions, you further entice clients to renew their subscriptions at a higher rate. This highlights to clients that even greater value is on the horizon, preemptively justifying any additional price increases in the future.
Oliver Savill, CEO and Founder, AssessmentDay
Lock in the Original Rate
At my marketing company, we don’t raise prices for existing clients unless they change the services they’re using. This allows us to increase prices for new customers while simultaneously showing our existing customers we value them and their loyalty.
This strategy doesn’t work in all industries, but I’ve found it to be extremely useful in my consulting business. It builds goodwill and credibility, and those are invaluable.
Temmo Kinoshita, Co-founder, Lindenwood Marketing
Introduce Tiered Pricing
Tiered pricing can help startups raise prices without alienating customers who are unwilling to pay the increased cost. This involves creating multiple subscription levels with different benefits and costs associated with each option—letting consumers choose between more expensive plans that include additional features or services or cheaper alternatives for those who don’t require all the extras.
This can be an attractive way to charge prices that reflect the value of your product while still meeting customer demands. Not only does it provide customers with flexibility in terms of what they pay for, but the ability to select a plan based on their individual needs also often results in a higher satisfaction level.
Nick Rivadeneira, Founder, Racebuilds
Boost the Perceived Value
The only proper way you can do this is to focus on increasing the perceived value. The first point I would look at is actually, are you communicating all the value you provide currently? Think about your product or service, and think about what it means for the client both in terms of benefit, and also what could happen if they no longer have your product. Would they be in a worse situation?
Communicating that you help your customer not only by using the product but that they would be much worse off without you, that’s where you can show more value. They might not fully realize all the value that you are currently offering them, and you might not either, really think about what it could mean for them and get those points across. This increases the perceived value of your offering, allowing you to effectively raise prices.
Harry Boxhall, Freelance SEO Consultant, Boxhall Marketing