We’re delighted to be sharing with you a monthly column from Dr.PAWPAW Founder, Great British Entrepreneur of the Year National winner 2020 and DIT UK Export champion, Johnny Paterson.
We’re delighted to be sharing with you a monthly column from Dr.PAWPAW Founder, Great British Entrepreneur of the Year National winner 2020 and DIT UK Export champion, Johnny Paterson. Each month you'll be gaining insight from his advice, findings and general gripes about running a successful business, stay tuned.
Increasing your prices is an important part of your company strategy, it’s a necessity. I’m going to break down and share with you some ways to make the whole process less scary for you and your business.
Take the plunge: Confidence is key
For far too long, I found the idea of increasing prices at Dr.PAWPAW intimidating. I felt it wasn’t the right thing to do, I was forever worrying about the economy and about what my customers would think. Then came the point where everyone was making more profit but me, this is when I had to take the plunge. By putting together an annual strategy, you can pinpoint where you can increase your prices and by what % and make it a common theme so that your customers understand and expect it. In the early stages I never increased my prices - so when I did for the first time it was very difficult. Today people expect and accept it, knowing it forms a key part of our strategy and is necessary to cover our costs.
Give warning, people in business hate surprises
If you’re running a business similar to mine, there will be many contracts in place with your retailers, distributors and agents. Usually in the small print of these contracts you’ll find a request for a minimum notice period about price increase. This is required as well as being firm with it. When you increase your prices, and you have given them a warning, stick to your guns. Increase your prices when you say you will, make sure you are clear and send frequent reminders ahead of schedule.This is also a great sales opportunity to get a large order on your products before the date your prices will rise.
Check in with your suppliers
There is nothing worse than increasing your prices by say 5% or even 20% and you haven’t done your research. If your suppiers come to you at the same time and say right we’re increasing our prices by 10% and you’ve already contacted your customers with a 5% increase you’re gonna be left with a deficit. Make sure you speak to all suppliers before the price increase and ask them for their advice. Communication works both ways, enforce with your suppliers the need for plenty of warning for any price increase in order for you to manage your own strategy efficiently.
Always be transparent
I do believe if you are going to increase you really should give great insight into why you are doing it. Don’t lie - be truthful. Over the years the price increases from Dr.PAWPAW have come from things such as a rise in shipping costs, the price of ingredients but also things like the cost of living. We are a Greater London-based business and with that we have to look at the cost of our staff living to make sure they have more than the living wage. Make sure you give clear and concise answers when your price increase is delivered, this is not a time for fluff.
Delivery and execution
This is always tricky. We have many types of customers which total thousands of people we must contact. We wrote to them all with lots of warning via e-mail marketing and many didn’t like the way this was delivered. For us, this was the only way to tell them altogether at the same time with all the precise and transparent information on why an increase was needed. Although customers may not have liked the initial way they were told, we ensured we followed up with many of them directly via phone, email and Whatsapp to answer their individual queries.
It’s never easy to increase your pricing and break the news to your customers. If you ensure that you give them clear, concise communication with plenty of warning this will definitely help soften the blow and allow them to gather greater understanding for the changes. Make sure you are looking at your strategy regularly and be mindful of your delivery, transparent with your reasons and confident in your business decisions. I hope this has helped you and given you some insights on price increases that you can apply to your own business. Until next time - Johnny.