In any kind of business, few elements are as delicate as pricing. To the untrained eye, raising your price point is an easy way to boost profitability or even position your product or service to an entirely new demographic. However, aiming too high risks driving a decisive wedge between your business and prospective customers or even alienating your existing customer base. Yet, in some cases, raising your price may not turn out to be an epic misstep on your part, but actually the best decision you could make for your business.
Believe it or not, there is a right way to raise prices without putting your studio’s future on the line. Because the appeal of your business is so intrinsically tied to relationships and customer loyalty, it’s essential that you take the necessary steps to preserve the goodwill you’ve established with students thus far. So, as you consider a price raise, here are some key strategies you should keep in mind to ensure that you tread carefully.
Explain Your Rationale
The most obvious way to raise class prices without losing customers could also be one of the most effective. Don’t spring the increase on your students without any warning. Instead, communicate with them honestly and openly about the decision. Give them some time to process it, and try to position it as a positive development for the future of your studio and the effectiveness of your classes.
After all, higher prices ultimately mean higher profits and the opportunity for streamlining your operation, perhaps with studio management software. One way to convince customers of the new prices could be to convey it as a percentage change, since this will contextualize it within the grand scheme of the value they receive from your studio.
Test a Higher Price Point
With every major business decision, it’s always a good idea to test the logic behind the strategy. Reach out to a few of your members -- perhaps an even cross-section of newer members and established regulars -- and inform them of the impending price change. Then let their reactions guide you. It’s possible that you may have reached too high with your price increase, or there might be a better way to “sell” customers on the change. In any case, testing the concept in small groups will minimize the damage before it has a widespread effect on your business.
Prove Your Increasing Value
To offset any negative reaction to changing your prices, do whatever you can to enhance your service offering. For your studio, perhaps that means upgrading your equipment or adding more classes. Regardless of the details, the point here is to demonstrate that customers both new and existing are getting something more with their business. It shows that your studio is constantly evolving and that business decisions such as price hikes are a result of improvements and a desire to serve them better.
Offer Alternative Pricing Packages
If you’ve decided that it’s time to raise prices, but are worried this may result in loss of existing customers, you can make sure your current customers are happy. Why not consider offering alternative pricing, wherein existing customers put off by the price increase for a few months, or can shift to a more economical option? In the case of your studio, this may simply translate into fewer classes or shorter membership periods. By including tiered pricing, you’ll also be able to attract a broader range of students and position the higher-end version as a premium product. If your current customers feel like you’re treating them specially, they’ll be more likely to stick around.
Develop Value Perception
Far more important than your actual prices, the perceived value of your service is what will shape your ability to increase your price point. Considering that your studio serves as a lifestyle enhancement for your students, you may very well be able to offer classes and membership at higher prices simply because the service you provide is so valuable to students. By positioning yourself as an expert in your industry, you can also boost your studio’s profile and reputation, further justifying your prices.
Gradually Grow with Demand
Rather than making a sudden hike in your prices, the best way to raise them is to do so gradually. As demand among your students increases, you may realize that you can significantly boost your bottom line by charging a bit more for a specific class or just to new students. The most popular services you provide are the least likely to be affected by a minor price increase, and this could be an excellent way to fuel your studio’s future success, as these higher profits could even be reinvested to make your studio that much more efficient.
A Balancing Act
Pricing is always a conundrum, but we’re confident that the above tips can at least better prepare you for a potential price raise. Finding the ideal price point for your business is perhaps one of the most challenging balancing acts you’ll face while running your studio, not unlike that of supply and demand. Making matters even more complicated, the perfect price for your students will often evolve over time along with your class offerings and business model.
By staying closely connected to your students, you’ll be able to gauge how best to meet their needs and the perceived value they see in your studio. Only then will you be equipped to make the difficult call of raising prices and know how to communicate that message to your students in a positive way. Remember, your customers are your lifeblood, and your priority should always remain to preserve the relationships you’ve built through your studio.