While some business owners fear having to increase prices for loyal long-term customers, the truth is that what most customers fear are “switching costs”--the cost to leave you, train a new vendor, and go through the whole learning curve all over again with someone new. Often the switching cost is higher than your increase in prices, so they likely won’t leave you just for making changes. 

In addition, if you have limited production capacity and a large and hungry demand that exceeds your capacity to produce, simple economics justify a price increase. So, if you can’t easily scale your production capacity, then use pricing to address how to best serve customers in the face of a limited supply. Research the market, and use what others are charging as a gauge. If you can raise your price by 5 or 10 percent while keeping other costs fixed, you’ve immediately increased your profit--and probably the amount you can pay yourself.

Published on: Jun 13, 2017