Increase prices without losing customers with tips from the article “3 Smarter Ways to Raise Prices” from Inc.com. When the cost of doing business rises, increasing prices may be the only way to survive; but customers aren’t always so understanding. Remember Netflix’s pricing debacle last year? But, if you raise prices the right way, you may be able to increase your margins and actually increase customer loyalty at the same time.

1. Have a credible reason. Customers will be more sympathetic and supportive if they realize that your price increase is in response to rising costs or out of an absolute necessity to survive. Even saying that you’re reflecting the prices of the competition is better than making it seem like you just want more money – which is essentially how Netflix’s price change was received.
2. Provide plenty of warning. As soon as you decide to raise prices, begin informing your customers so they aren’t shocked when the change goes into effect. In your regular communications, explain the need for the increase and build your case. Keeping them involved will make them less likely to leave. A corporate blog or a customer newsletter can be especially valuable in a situation like this.
3. Give existing customers a discount. Here’s your opportunity to build loyalty. “Let’s suppose you need to raise your price 15%,” the author writes. “Rather than make the price rise across the board, raise the price 20% for new customers—but only 10% for current customers.” This discount, even if it’s only temporary, establishes that you value your loyal customers and have made the effort to give them the best deal you can. If you’ve already taken the steps described previously, your customers should be grateful for the discount rather than upset about the increase.

Click here to read the entire article from Inc.com.