Many businesses are facing up to an unpalatable truth – they need to improve their margin from existing customers. Doing so without pushing them away requires skill and foresight.


In a recent blog, we covered the tricky and sometimes traumatic task of evaluating your own profitability. While doing so, however, many businesspeople will face an unappealing revelation: their valued existing customers simply aren’t paying enough.

An arbitrary price rise without warning or explanation is guaranteed to get up anyone’s nose – and, in a competitive marketplace, will cost you customers. While some clients will always balk at an increase in their bill, there are ways to cushion the blow – and hopefully retain their business.


Add Value

One of the clearest cases that you can make for a price rise is added value – giving additional service, or extra features, beyond the scope of your original agreement. In some cases, you’ll have already been doing with this for free. Sitting them down to discuss this situation, and getting them to pay for something they’ve taken for granted, will be difficult – but it has to be done.

If this isn’t the case, how best to upsell them is down to your knowledge of the client, and how important it is that they pay more. You can, for example, present it as a fait accompli: explain that you’re no longer offering the service or product package that they’re using, and advise them of the package that you want to offer. Alternatively, you can sit down more consultatively and sell them the added features or service that will make the contract more profitable – just be prepared for the fact that they may reject your offer.



Explaining where a price rise is coming from doesn’t always satisfy customers, but it’s better than springing one on them out of the blue. Some customers will accept a simple explanation that your own costs have risen, and that you need to pass some of these on. Others will want a more detailed breakdown of where increased costs are coming from, and why you can’t just absorb them. What detail you offer depends on their comfort zone.

In some cases, you’ll be tempted to explain to customers that they have simply not been paying enough to make the business worthwhile. While this can be effective, it’s also a dangerous tactic, as it leaves two potential avenues for the customer: take the price rise or leave.


Offer Options

Of course, as any entrepreneur will tell you, ‘take it or leave it’ isn’t an appealing proposition to most customers: people want to feel that they have some say in what’s happening. For that reason, it’s a good idea to approach underpaying customers with a list of options. These can include taking a larger package, a reduced portfolio of essential products or features, or a staged increase in fees. In either instance, giving your customer options at least avoids them seeing your price rise as high-handed and arbitrary.


It’s important to be realistic – when you raise your prices, you will lose some customers. The tactics above won’t prevent that from happening altogether but, by giving the customer an explanation and some input into the change, you stand a better chance of keeping them.


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