Tips on Increasing Your Prices to Cover Rising Costs of Materials

Updated: Aug 23


Tips on increasing your prices to cover rising costs of materials

The COVID-19 pandemic is still the root of current inflation challenges. Rising costs occur when there is a high demand for products or services but a limited supply. The pandemic stalled or ceased production and shipping worldwide. However, product demand didn’t go away, so product shortages resulted in backorders and price increases. Couple this with the Russian invasion of Ukraine, and you see how the supply chain challenges continue to perpetuate price increases.


With increasing prices of fuel, materials and resources, it's only fair to be looking at increasing the prices of your products or services.

Now... just as you aren't happy about the rising cost of your resources, customers won't be happy about the rising prices of the services they need - so it's important to be prepared and know how to best handle this tricky conversation!


Be Upfront


Communicate with customers about the impact of inflation on your local business. Explain that your prices are going up and clarify why. Share how gas prices and supply chain issues are increasing your costs, and you’re adjusting prices to plan for the longevity of your business. Keep your message positive. Emphasise how you want to continue being a trusted provider. Address how you are maintaining value while managing increased expenses.


Be Transparent


If possible, give customers advance notice of price increases. You must be transparent to minimise shock and frustration.


Transactional businesses will need to address price increases at the point of sale, or when preparing a quote. Be straight forward. Add a note alerting customers of the price changes, and offer to talk through why they're happening.


Contractual businesses likely won’t change rates until there is a renewal. As a local business, this is a customer you want to retain. Proactively communicate price increases through letters or emails. You can even add a note in the contract about future increases.


Be Prepared to Prove the Value You Add


As prices go up, consumers evaluate every purchase. Make sure your customers recognise the value your product or service offers. In any communication you share about price increases, emphasise your unique selling proposition. Make your benefits clear and memorable. More importantly, identify why your product or service is essential to your customer’s life. If you help them see why they cannot live without you, they’ll see you as an essential purchase.


 

Fuzey can help you future-proof your business so that this recession won't slow you down. Attract more leads, convert more customers, and retain more business with Fuzey. To learn more, get in touch at hello@getfuzey.com or book a demo clicking the button below!