How To Organize A Price Increase

WeStock Team
March 16, 2023

No one wants to do it but unfortunately, it’s about survival. We’re talking about the dreaded price increase. There are many reasons why prices need to be raised but in the last few months due to supply chain issues and inflation, more brands than ever are stuck with the same dilemma: raise prices or have smaller margins. If you are one of the brands navigating these challenges we’re here to help.

Breaking the News to Your Customers

The first thing to remember is that no matter what, transparency helps you, more than it hurts you. Being upfront and honest is always the best route. Here are some tips to make it as painless as possible.

Don’t Wait

Imagine if your monthly Netflix subscription suddenly doubled with no warning (well actually sometimes it feels that way right?). You’d be confused maybe even angry right? You’d be thinking “Why did no one tell me?” or “I might have canceled if I knew this was coming.” You don’t want customers dming you or emailing you asking why the price went up. Control the conversation by putting it out there early. Email existing customers a heads up about the increase before it happens and again when it goes into effect.

Give Ample Time

Don’t change the price overnight! Especially if your product is a recurring purchase, they have a subscription or even if it’s just their favorite product, time to adjust is crucial. And not just emotionally. Yes there might be some people who are upset but more than that you want to support the people who might want to factor this change into their budget. With lots of CPG prices rising that can add up quickly, they may need to take a look at the amount they set aside for grocery items.

Get Everyone on the Same Page

If the company is more than a one-person show, it’s essential to make sure everyone in the company is aware of the increase. This helps create unity around the decision and limits confusion that could happen down the line. Imagine if a social media manager or customer service specialist wasn’t aware of the increase and a customer asked why the price had changed-that’s, not a good look. Send a company-wide email, set a meeting, and make sure all the points you are sharing with customers are ones that everyone is aware of

Show your Value

While many brands are simply having to shift prices due to rising costs, maybe that’s not the case for you and your prices are increasing for another reason like a new manufacturer, more sustainable packaging or a higher quality ingredient. If that’s the case, you need to illustrate why that change brings added value to them that warrants the increase. Even if you did not intentionally make a change and are just dealing with rising costs, you can still illustrate the value you bring.

For example: let’s say you are an organic almond milk company and the organic almonds you use cost $200 for 50 lbs but now with inflation, weather, labor shortages, and their increased costs that 50 lb bag is now $500. If you want to stay using those almonds you will have to increase your prices so you as a brand have to decide do we continue using this higher-priced ingredient or find a cheaper alternative. It brings value to the customer to use the highest quality ingredient so explaining that the prices are increasing so you can continue to bring them the highest quality product is a great way to frame it (ie: you could have used a less expensive, lower quality ingredient but actively chose not to).

Be Transparent

Honesty always wins. While you can’t please everyone, being upfront about the decision and the price increase process will make your brand seem more trustworthy to the customer. You might have some angry people but we’ve found that overall people are understanding, if you are vulnerable about what the brand is dealing with and how you came to the decision people can sense that authenticity.

We know it can be stressful and you don’t want to disappoint your customers but at the end of the day, your loyal fans want your business to thrive and be around for a long time, and raising your prices might be the only way to make that happen right now.  

Now How to Break the News to the Buyers

First the good news, buyers are well aware of the challenges facing CPG producers right now and more so than customers they are understanding of the need to increase prices.

Make sure you alert them about upcoming price increases months in advance and explain to them the reasoning behind the increase. You will want to explain that you are educating your customer base as well and that you plan to support the education process when the new price hits shelves.

If you are already achieving the weekly velocity numbers that the store has set for your category then this news should not be that jarring for the buyer to hear. They have dealt with it before and any good buyer will help you and not hurt you during this process.

It also helps to have a promotional plan in place. Yes, we are increasing prices, but we are also going to lower the initial impact through a strong promotional plan and demos. Show the buyer you know that this will affect them as well and you want to support them.

The overall theme of this post has been transparency, and we can’t stress that enough if you do plan on increasing prices. Most emerging brands don’t have the capital to hold prices during tough times like larger brands do, so make sure to be honest with your accounts and customers. Also, make sure you are increasing prices a few months too early instead of a few months too late.

WeStock Team

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