Although raising your prices is often necessary, it’s unlikely to make you popular with customers. It could even lead to a decrease in sales. Fortunately, it’s possible to increase e-commerce prices without losing clients. With the right strategies, you can also enhance brand loyalty and attract new customers.
In this post, we’ll share five key tips to help you increase e-commerce prices while retaining customers. Let’s get started!
1. Communicate Openly With Customers
One of the biggest mistakes you can make when increasing your prices is to not say anything and hope your clients won’t notice. If you want to keep customers on your side, you’ll need to help them understand your decision by adopting an open channel of communication. By telling customers what’s going on, you can build trust with transparency.
For example, Oxford Pennant made an announcement on Instagram to inform their customers about price changes:
The post included dates for when the new prices would come into effect. Most importantly, it communicated the reasons behind the price increase: higher supplier costs. Additionally, the company emphasizes the authenticity of its product by committing itself to US-sourced materials.
Communicating openly can help customers see things from your point of view. It can even result in them gaining more respect for your brand.
Let’s take a look at the reaction to Oxford Pennant’s announcement:
As you can see, customers responded positively to this message. Many customers appreciated the transparency and promised to continue shopping with Oxford Pennant. This shows that being honest with customers can also help you increase your e-commerce sales.
Although public announcements via social media are effective, it can also be a good idea to send emails to your subscribers. This enables you to use personalization and address your customers directly.
2. Choose the Right Moment
If you’re not in a hurry to alter your prices, you might consider waiting for a suitable time to help justify your decision. For instance, you can do this when moving to new premises or launching a new website.
This can give you a more plausible reason for raising e-commerce prices. It also shows customers that the increase is not random or opportunistic.
For example, One Stripe Chai shared the news in an email before the holiday season. The announcement coincided with a new website:
The email shares the reasons behind the decision to raise prices. It also highlights the sustainability and quality of the company’s products. This can help the brand build trust and loyalty with customers.
Alternatively, you might need to raise your praises due to global events and circumstances, such as the Covid-19 pandemic and rising fuel costs. These events don’t just hit businesses, but they create problems for individuals too. Therefore, customers are more likely to understand your decision.
3. Increase the Value of Your Products
When it comes to raising prices, you have two options. You can either increase the perceived value of your product or its actual value.
Many customers won’t be happy about paying more for the same product or service. However, increasing the perceived value can help you soften the blow.
For example, if you’re an e-commerce fashion retailer, you could introduce a “new line” of jeans that are identical to your existing range in terms of production costs but differ in appearance. You could then market this new line as “premium jeans” that are more valuable than the current range.
Alternatively, you could add new features to your existing product, such as gift wrapping, free shipping, personalization and warranties. These extras are not related to the product itself, but they can provide added value to your customers:
You can also increase the actual value of your product or service by improving the quality. For example, if you own a restaurant and the rent is increasing, you could purchase high-quality ingredients and market them on your menu.
This way, you can justify the increase in prices (as a result of better ingredients). However, the raised prices are actually accommodating both costs (the ingredients and the rent).
4. Offer Exclusive Deals and Discounts
Simple marketing strategies can help you reduce the risk of negative customer responses. For example, you could hold a sale right before you raise your prices.
Perhaps you could offer exclusive discounts, or give buyers the opportunity to lock in purchases at existing prices. This can help drive long-term brand loyalty.
Plus, discounts can also be an effective way to attract new customers:
Another option is to offer volume discounts or subscriptions. This way, customers have an incentive to commit to long-term contracts or bulk purchases in order to reduce the cost per item/month. For example, while your prices might be increasing by 8%, you might offer a 5% discount for customers who take out a 12-month subscription or spend over a certain amount.
5. Create Product Packages and Add Multiple Pricing Options
You can reduce the impact of price increases by creating product bundles that add greater value for customers. For example, an e-commerce store that sells computers might create bundles that consist of a computer, keyboard, and mouse:
Product bundles also work as an upselling technique. It can result in a larger sale for you and more value for the buyer.
You can also add different prices to your products. For example, you might charge more for limited editions, special colors, or extra features. Not only does this provide an offering for almost every type of shopper, but it can also make the lowest price look affordable, even if it is an increase on what the customer used to pay.
For instance, you might purchase a small coffee for $4.30, which might seem expensive. However, when you compare it to $4.90 for a medium and $5.30 for a large, it actually looks quite reasonable. Providing multiple pricing options can also encourage customers to opt for the more expensive option if there’s no big difference in price.
Conclusion
The idea of raising your e-commerce prices can be daunting. Although it’s often necessary, it’s a decision that can lead to customers jumping ship for cheaper alternatives. However, there are ways that you can increase prices without losing customers, such as by communicating openly with clients and adding value to your products.
Do you have any questions about increasing e-commerce prices? Let us know in the comments section below!
Photo by Morgan Housel on Unsplash