It’s no secret inflation has been on the rise over the last few years. Between November 2021 and November 2022, consumer prices jumped 7.1%. Inflation is down from its peak rate of 9.1% in June, but it’s still higher than at any point in the past 40 years.
While the Federal Reserve is raising interest rates to cool down rising prices, consumers and businesses alike have been feeling the heat for months, especially those in the manufacturing and transportation industries. As the cost of goods and services increases, companies face higher prices for raw materials, energy, and other key expenses. This makes it more challenging to turn a profit, especially if businesses are unable to pass on the higher costs to their customers.
To mitigate the impact of rising inflation, businesses in the manufacturing and transportation industries may need to implement strategies such as cost-cutting measures, price increases, or diversification of their product or service offerings. If your company has decided to raise consumer costs due to inflation, it’s crucial to communicate price increases responsibly to keep loyal customers on your side.
How to Announce a Price Increase
While price increases can be challenging to communicate (and even more challenging for consumers to agree to), it’s important to approach them clearly and transparently to maintain trust and credibility with your customers. Here are a few tips to help minimize negative responses to price hikes and maintain strong customer relationships.
Be open and transparent with customers about the price increase and avoid being deceptive or hiding the increase in the small or fine print. It’s important to directly address consumers and inform them about pricing changes as soon as possible, so they don’t feel like you’re tricking them.
Similarly, avoid dwelling on the economic environment or making excuses. When justifying price hikes to consumers, it’s essential to document and communicate precisely what changes are driving prices up. Avoid making broad statements about the economic environment or using vague language. Instead, clearly outline the specific factors driving the price increase in consumer messaging, such as increases in the cost of raw materials, labor or transportation.
Support your explanation of the price increase with evidence, such as data on changes in the cost of raw materials or labor. This can help customers understand the specific reasons for the rise and feel more informed, knowing that your rising prices are out of necessity rather than greed.
Focus on the Positive
When raising prices, it’s important to remind your customers of the value of your product and why they should choose you over a less expensive competitor. Here are a few tips for highlighting the value of your product beyond pricing in your consumer messaging:
- Emphasize the benefits of your product: Remind customers of the specific benefits of your product and how it can improve their lives or solve a problem they may be facing.
- Highlight the quality of your product: If your product is of high quality, be sure to emphasize this to customers and that your brand dedicated to maintaining the quality of products you provide. Highlight any awards or accolades your product has received and provide examples of how it compares to similar products on the market.
- Discuss any additional services or support you offer: If you offer other services or support that your competitors do not, be sure to highlight these to customers. This could include personalized customer service, technical support or a money-back guarantee.
- Emphasize your brand’s reputation: If your brand has a strong reputation in the market, be sure to highlight this to customers. Share customer testimonials or showcase any media coverage or industry recognition your brand has received.
- Offer incentives or discounts: Consider offering incentives or discounts to customers to help mitigate the impact of the price increase. This could include loyalty programs, bundle deals, bulk discounts or special promotions.
Overall, the key to reminding customers of the value of your product is to emphasize the specific benefits and features that set your product apart from competitors. By highlighting your product’s quality, value, and reputation, you can help customers see why it is worth the investment.
Even if customers are upset about the price increase, showing appreciation for their loyalty and business can go a long way. Thank them for their understanding, and assure them that you are committed to continuing to provide high-quality products and services.
It’s important to be as specific as possible about the timeframe of the increase, how doing business with you may look different, and how the new pricing will come into effect when communicating changing prices to your customers.
Start by providing a clear timeline that specifies the exact date when the price increase will take effect and how long it will remain in place. If the price increase is temporary, let customers know when the prices will return to their previous levels. Giving your customers as much notice as possible about the price increase can help them prepare for the change and give them time to make any necessary adjustments.
Be specific about which products or services will be impacted by the price increase and how much. Consider providing examples or using visual aids to help customers understand the impact of the price change. If the price increase will affect payment or billing, be clear about how your company will implement these changes. Will customers be required to pay more upfront, or will the increase be reflected in their monthly or quarterly billing?
Announcing price increases to your customers due to rising inflation can be challenging for any business. Remember that it’s always a good idea to be open and honest with your customers and listen to their concerns and feedback. This can help you understand their perspective and find ways to address their concerns while making your customers feel like they’re being heard.
By taking these steps and implementing the strategies outlined above, you can stay ahead of the curve and successfully navigate the challenges of an inflationary environment.
Download Our Free Guide for More Business Tips on Navigating Inflation
Looking for more tips on how to protect your small or medium-sized business from the effects of inflation? Download our free PDF guide, “7 Strategies to Protect Your SMB from Inflation,” for valuable insights and practical advice on navigating the challenges of rising inflation and thriving in your market.