Looking to raise prices in your retail store?
This is a common situation just about every retail store owner will face at some point.
It can be a stressful time, since price increases can upset customers.
Price increases can also impact the overall number of sales you make.
However, there are a number of strategies you can use to make the transition smoother.
When it’s difficult to keep your prices down and maintain your profits, you might also be considering closing your shop and doing something else.
In that case, a retail store closing consultant at Silverman Consulting And Retail Services would be happy to guide you through that process.
Our team has decades of combined experience with managing retail store closing sales, retail store retirement sales, store relocation sales, and much more.
A managed sale from Silverman can help you maximize your store closing sale, giving you the resources you need to prepare for the next stage of life.
After all, you only get one shot at a store closing sale – let us help you go out with a bang.
But if you’re not ready to close up shop just yet, we’ve put together this article.
We’ll start with describing the different ways to change price, and then we’ll move into descriptions of five specific strategies to try.
How to Approach Changes in Price
Don’t get too tied up in knots over having to raise prices.
Everyone knows prices will sometimes go up.
Over the past 10 years the cost of living has increased by an average of 2.56%.
So, even with 2.5% annual increases, you’ll be falling behind.
After all, your rent, payroll, and inventory costs will also increase.
Broadly speaking, there are two main ways you can approach changes to your prices: aggressive, and passive.
Aggressive changes in price are more common at larger retailers.
Some bigger retailers will change price tags to update their prices frequently.
This approach considers the cost of a future order, which will generally be higher.
Repricing older merchandise, and getting more profit on that merchandise, helps to create more of a cushion to help pay for a future, more costly, order from a vendor.
This helps the store stay profitable.
For smaller retailers, it’s more common to use a passive price raise approach.
In passive price increases, you only change the price when you receive new inventory.
You might feel like it isn’t “fair” to price some things higher, or that it might be too much work to reprice everything.
However, being proactive with your price increases can help make sure you maximize your profit in an easy way.
It’s also simpler than ever to change your prices.
If you’re using a modern point of sale (POS) system, you may only need to update a database, shelf tag, or possibly individual item tickets.
RELATED: How to Choose the Right POS System for Your Retail Store
How to Approach a Price Raise
Now that we’ve talked about aggressive and passive price raise approaches, we’ll move into specific strategies for price raises.
Pricing to be profitable can be tricky.
Not only do you have to consider what you paid for the item, but you also have to consider your margins and what you think the market will be willing to pay.
Whether you’ve found your original pricing was too low, or you’re trying to make up for your own price increases, there are many situations that can lead to changing your prices.
Overall, raising your prices the right way can help you maintain profitability.
Below, we’ll describe and expand on five strategies and considerations to help you raise prices without losing customers.
1. Try Reducing the Sizes of Your Offerings
Many companies are making offerings smaller to account for the costs going up while keeping the cost the close to the same for the customer.
Restaurants make their serving sizes smaller, cosmetics brands can make bottles smaller, candle makers can make smaller candles and so on.
When prices stay close to the same, it can be less of a shock for regular customers.
But it’s important not to be too aggressive with this approach – “shrinkflation” is a known phenomenon many retail shoppers are starting to recognize.
That said, it’s still a widely used tactic.
2. Bundle Your Products Together
Another way to make it easier for customers to accept a price increase, is through offering bundles.
This allows you to still offer a way for customers to access better value.
For example, if you’re raising the price for an individual candle, you can offer a bundle of three candles for a discounted price.
This helps you move more inventory, and has the added benefit of helping your business stay competitive.
3. Introduce a New Customer Reward Program at the Same Time
It can be easier for a customer to accept price increases if they’re also going to see new perks.
So, when you’re planning price increases, make sure to consider what you can offer to your customer that can increase the value to them.
It’s best if what you offer comes with minimal hassle or cost to you, and encourages them to become repeat customers.
RELATED: Is a Customer Loyalty Program for Small Retail Stores Worth It?
4. Make Sure to Consider the Timing Carefully
Timing can be essential to effectively raising your prices.
This is because the best time to raise your price is when customers are satisfied.
Just imagine being unsatisfied with a purchase, and then learning that the price is going to go up.
But if your customers are happy with your product or service, it will be easier for them to continue to see your worth.
5. Communicate Your Reasons Effectively
You probably can’t avoid upsetting some customers when you raise your prices.
However, if you plan ahead and communicate your reasons effectively it can make it easier for them to accept the price increase.
Generally, the two major reasons customers will accept for price increases are improving quality or rising costs.
Even if your goal is to increase your profits, it’s best to keep that to yourself.
Book Your Consultation with Silverman Consulting and Retail Services Today
Price increases in your retail store can be really tricky and stressful.
There are a few ways to make them go more smoothly, but constant price increases are difficult to sustain.
If you’re finding yourself constantly worried about the prices at your retail store, you might also be thinking about moving on to your next venture.
If it’s time to close your store, we’re here to help.
An expert consultant at Silverman Consulting and Retail Services will work with you through each step of the process.
We’ll make sure you get the help you deserve, to make your store liquidation go as smoothly as possible.
This way, you can have more peace of mind as you move into the next stage of your life.
Book your consultation with Silverman Consulting and Retail Services today.
Silverman Consulting & Retail Services229 Yonge St suite 400,
Toronto, ON M5B 1N9, Canada
1 (888) 955-1069