High Clarity Accountants

7 ways for small businesses to increase prices without losing customers

The prices you set are are without doubt the most important numbers in your business. You absolutely must get these right. The wrong price is the single biggest reason why many small businesses struggle or even fail.

There are many strategies you can use to improve your business, but when you get the price right, you’ll transform your business overnight. It’s instantaneous. However, you might be surprised at how and why this happens…

To prove that setting your prices is one of the most important things you will ever do, let’s start by looking at an example.

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ITelCo has commissioned some market research, which suggests that they have two options:          

Option A –    They could increase their sales volume by 20% if they reduced prices by 10% to £90, or             

Option B –    They could put up their prices by 10% to £110, but then would lose 20% of their sales volume.       

When we ask them what ITelCo should do, most entrepreneurs have no hesitation in saying something like: “Go for option A. It is always worth selling more, and anyway, ITelCo gains more in volume than it loses in price, so it must be profitable”. 

Are they right? Unfortunately not. And it’s because so many people get this question wrong that their businesses get into very real trouble. 

So let’s continue with our example by seeing what the profits will be next month under each of the two options. 

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As you can see, under option A (i.e. the price cut) ITelCo makes a loss and is heading for disaster. It is actually worse off than it was before the price cut. And it is much worse off than it would have been if it had increased its prices.

There is nothing very special or unusual about this example. It simply illustrates a fundamental point that is all too often overlooked: stimulating sales by cutting prices may boost your top line turnover, but it can just as easily devastate your bottom line profits. 

This can show the importance of correct pricing, but you may be thinking I worked hard to get these customers, I really don’t want to lose any!

This is where our list of strategies can help you..check them out 👇🏼 

1️⃣ Have a price discrimination strategy

So what is this and why does it matter, let me explain….

Example: You decide to have one price for either your monthly support or a quotation for a project.

Prospect 1 accepts this price without any question – In this case could you have charged more and therefore have missed out on additional profits?

Prospect 2 finds it too expensive – In this case you loose the client as they maybe wanting a more basic service

The point is different people are prepared to pay different prices so dont make the mistake of only having one price.

So, how to charge different customers different prices?

⚖️ creating different versions of your services at different prices

⏰ charging different prices for faster or slower response limits

🚦 creating bundles to increase the value perception

2️⃣ Create a package detialing the indiviual services you provide

To explain if we take the example of a small child who wakes up on Christmas morning and runs 🏃 down to the tree to open his or her presents. What would give them more excitement..

one present🎁


many more perhaps smaller presents🎁🎁🎁🎁🎁

Packaging your services in can increase the value perception and therefore increase the amount you can charge for essentially the same service you had before.

It’s all in the value you offer people with the different options. Here’s the thing we know for certain – effective packaging of your Telecom or Tech services is the path to far greater profits. 💵

So how do i package my services? 🎁 This is a fairly simple process, you just need to think about all those small bits of your normal service that are included but which are perhaps not communicated that well. Split those up into individual items and create a bundle based with the individual elements listed out. You can then create different bundles with a different number of individual items..

3️⃣ Do not lower prices to entice more customers. 👎

It’s probably unwise to set your prices too high or too low without a good reason.

If you price too low, you will just be throwing away profit. If too high, you lose customers (unless you can offer them something they can’t get elsewhere).

While price cutting serves to repress or destroy competition, it can prove to be harmful to your business. ☠️

Ask yourself this…. Are you remotely likely to win that minimum number of extra customers? If the answer is “No” – or even “Probably not” – then cutting your prices is not a good idea.

Cutting price doesn’t just affect your profit, but it’s not a good idea for your cash flow either. To make more profit at lower prices, your sales must be higher than they are now. And that means more money tied up in stock, work in progress and debtors – and more strain on your cash flow.

Price is without doubt the most powerful driver 💪 . Understand it well and it’s your key to success.

4️⃣ Consider having a tiering structure to your service offerings

We naturally perceive things in comparison to other things, which means that if we see two things in sequence that are different from one another, we will tend to see the second one as more different from the first than it actually is. This is called perceptual contrast. For example..

Imagining that you’ve got three buckets of water in front of you;

❄️One to the left is cold. ⚖️One in the middle is luke warm ♨️And one the on the right is very hot,

If you put your left hand in the cold water and your right hand in the middle one (the luke warm), then by comparison to the cold one, the middle one feels very warm. If you put your right hand into the far one, into the hot water and then into the middle one (which is the luke warm), then by comparison the luke warm will feel cold.

In other words, you will perceive the temperature of that middle bucket will be influenced by whether you have put your hand in the hot water just before or the cold water.

So what does this have to do with your IT business, we you can use the same principle in presenting your prices. If you first present the cheapest option, then the middle option will seem expensive

However if you start of presenting the most expensive option then the same middle option will seem much more palatable..

Contrast matters – absolute values don’t. Do you agree?

5️⃣ Consider having some sort of guarantee for the services you provide

Guarantees are one of the most powerful things that you can do because they take away the risk of someone buying from you & separate your proposition from that of your competitors.

You can increase the perceived value of your services products by offering guarantees and actively promoting them. It not only sends a message that you have enough confidence in your service to stand behind it, it reduces the risk in the minds of potential customers that they will be stuck with a bad service if they buy from you.

How your guarantees are better than everybody else’s in the industry?

The key to creating extraordinary guarantees, according to business guru Michael Gerber, is to “Make a promise your customer wants to hear – a promise that no-one else in your industry dares to make – and then deliver on that promise better than anyone else around”.

Using this principle, you can add enormous value by helping your clients and targets to answer these three key strategic questions….

1 – “What promises do our customers really want to hear?” 👂

2 – “What specific promises can we make in this area that no-one else dares to?” 😱

3 – “What systems do we need to be able to deliver on that promise every single time?” 💻

6️⃣ Make sure you effectively communicate your value proposition

In the age of the internet, your customers have more options than ever before. It’s therefore more important than ever to make it clear why they should choose you over those competitors.

More often than not, people will buy for a business for one of two reasons

A) It better communicates the value that is give compares to the competition


b) If no difference in value can be seen then a choice based on price alone is made

So how do you stand out from the competition, capture customers’ attention, and drive sales based on your value rather than your pricing? You define and communicate your unique value proposition.

Here’s an equation to make everything clearer:

Benefits to customer – Cost to customer = Value to customer

An effective value proposition will highlight the benefit that most resonates with your customer. Ideally, this will also be a benefit your competitors aren’t advertising—which is what makes it a unique value proposition.

Some examples of benefits to clients include:

⏰ Reduce time spent IT decisions

❌ Ensuring they don’t make incorrect computer buying decisions

💰 You get on with what makes you money

📉 Reduce IT downtime costing money

🛌 Pass the stress on to us

Remember the secret to getting the right price, a price that truly reflects the value is to educate the client. So make the value obvious; explain the benefit to the client – what’s in it for them. Unfortunately, most IT support, Telecom and Tech Industries get this wrong because they talk in terms of features, of what their service does but not what how it benefits the client.

7️⃣ Allow the price of your services to be easily compared to everyday items?

Prospects will seldom choose your price without comparing to something else, they may compare to your other service offerings or the prices that the competition charge. 💻

The later can be avoided if you package your services in such a way that they are not easily comparable; however another strategy you can use to achieve this is called the contrast principle.

By allowing the cost of your services to be comparable to everyday items which are generally purchased without given much thought to them, the prospect can start to think of your services in the same way: ☕

For example perhaps the cost of one of your packages comes to £120 per month. For some this may sound like a lot of money, however if we take an approximate daily cost then this is more like £4 – which can be comparable to a cup of coffee or a sandwich.