Why? Because if you’re asking the question, there’s probably a good reason. Maybe the cost of operations is increasing. Maybe you want to improve the quality of your goods and services. Maybe you just want to increase the profitability of the business. These are all perfectly good reasons for your business — or any business — to raise their prices.
So what’s the hard part? Well, working out how much to raise prices by. This is where it gets tricky and you need to consider a few things first.
In these situations, you simply need to adjust your prices to reflect these new costs. Re-calculate your margins and markups and pass the increase on to the customer. If they ask, you have a perfectly good reason to give them. One of your biggest priorities as a business owner is to keep the company operational, and sometimes that means increasing costs.
This also counts for when you choose to increase your production costs. Better quality shirts, or better printing processes. If you’re going to go out of your way to provide better quality products with better service, you’ll need to adjust your prices to reflect this. Again, most customers will understand. They’ll be able to see why they’re paying that little extra.
But that’s all the easy stuff. What about when you just want to increase profitability? What if you’re attracting higher-paying clients and want your prices to reflect your growing prestige?
This is where it gets trickier. You need to know your customer base and your place in the market.
If you’re well known for being a 'discount' printer, then sudden, large increases are obviously not going to work. You’ll alienate your customer base and put yourself into competition with people who’ve been operating at a higher level for longer. This is a risky gamble that can pay off — but it can also kill your business.
A better move is to make a small increase, no more than 10%. This won’t drastically effect the cost of individual items, but across all sales will greatly increase your bottom line. You can maintain your customer base, improve profitability, and not need to justify yourself.
If you know your customer base can handle a price increase — or more accurately, if you’re aware that people think you’re worth a price increase — then you can experiment with how high you can go. Prestige and perceived value will take a business much further than the intrinsic quality of the product itself. Gauge your customers and their feedback, experiment with a few pricier options in your catalogue. If you’re running your business well, you’ll be pleasantly surprised with the response.
So should you raise prices? Yes. How much by? That’ll depend on your circumstances. With a little trial and error even a small increase will provide your business with a much appreciated profit boost. Happy printing!
- Joseph Guilar reporting for American Screen Printing Association.