How to talk to your customers about price increases

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Here are some effective strategies for communicating price increases to your customers.

The cost of doing business in the automotive aftermarket is increasing. Parts are more expensive. The skills shortage has seen our wages bills grow. Equipment, software and diagnostic tools are all becoming more expensive. For our businesses to remain viable and profitable, the reality is that at some point we must raise our prices.

That’s something we know some Members are reluctant to do, because it means having a difficult conversation with customers. So, what’s the best way to talk to customers about price rises so you keep them onside and keep them coming back?

Chris Smoje is a Perth-based customer service expert. He said he considers it a good sign when workshop owners are concerned about putting up their prices “because it shows that they’re truly thinking about their customers when they make such big decisions.”

Give advance notice

He recommends giving your customers advance notice of the price increases, so they can prepare themselves and budget accordingly.

“Customers don’t always know how much ‘cost price’ is, or what profit margins exist, so the biggest mistake is just making a price increase sudden and cold,” Chris said. “Then, when a customer merely questions the increase (because it doesn’t make sense in their mind), the business owner takes it as them challenging or disagreeing with it, which can turn the conversation more adversarial than it needs to be.”

Informing customers two or three months ahead of a price increase is appropriate (you don’t want to give too much notice or the message might either be forgotten or, worse, the price increase might come across as unnecessary or gouging).

Some businesses schedule regular (annual) price increases, often at the start of the financial year, which customers learn to expect.

Announce it in your regular marketing

Chris said it was best not to inform the customer of price rises in their “your service is due” email, but instead to include it in your regular/seasonal marketing communications.

“Doing it respectfully is important, but don’t come across passively,” Chris said. “You’re not checking that customers are OK with the price increase.”

Don’t over-explain

Another common mistake is giving customers too much information.

“Even if you feel that open transparency is best, it’s likely that most customers will try to pick holes in any information you give, and even try to make comparisons to competitors (who might not even really be competitors),” Chris said.

So, you might just say labour costs have gone up, or parts costs have risen, but not dive deeper.

But how do you get the wording right? Chris recommends checking communications about price increases from your own suppliers to see which ones you thought found the balance, and copy their format.

Give good customer service

Don’t forget to deliver on your customer service promise beyond the price increase.

“When price increases are made, it is essential to make sure that your service offering doesn’t lapse,”

Chris said. That is, if you’re charging more, provide an equal or an improved service, not less service, than your customers are used to (don’t cut the “nice to haves” like car washing at the same time as increasing prices).

Ask for feedback

Lastly, Chris recommends tracking customer sentiment about your new pricing.

“Once the price increase has been made, it’s important to incorporate ‘value for money’ questions in your feedback questionnaire,” he said.

This article was published 20/05/2024 and the content is current as at the date of publication.