price-increase-customers

You need to clearly communicate your price increases with customers. Source: Pexels/Rodnae Productions.

Finance
Harvard Business Review

Thinking of raising prices? You need to tell your customers why

Authors
Harvard Business Review
Business Advice
3 minute Read

COVID-19 restrictions are lifting in some parts of the world and the economy is booming in some sectors. Some labour and material costs are rising because of shortages, as is customer demand. Many brands have high pricing power at the moment, making price hikes almost inevitable. For brand managers, it’s no easy matter to communicate price increases to customers.

Many companies, and even entire industries, routinely raise prices without ever telling customers. But for products sold with subscriptions, leases or contracts, the manager must communicate to customers that prices have increased before the next billing cycle. When delivered poorly, the news can lead to customer complaints, social media outrage and, even worse, having to walk back the price increase, or losing customers altogether.

To help prevent such fiascoes, here are three actions that managers should take when communicating a price increase:

Communicating to your customers

1

Call the action a price increase — not a price adjustment, a price change or another euphemism

Decades’ worth of consumer psychology research has consistently found that attempts to obfuscate bad news rarely pay off for brands. Authenticity and honesty matter to customers, especially for bad news.

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