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How to raise your prices due to the increased cost of gas

Written by: Peter Geisheker

Article Overview: As the price of gas continues to rise, many companies are finding they have to raise their prices due to higher shipping/transportation costs. The problem is, how do you raise your prices to compensate for your higher costs without irritating your customers? Here's how...

How to raise your prices due to the increased cost of gas

As the price of gas continues to rise, many companies are finding they have to raise their prices due to higher shipping/transportation costs. The problem is, how do you raise your prices to compensate for your higher costs without irritating your customers? Here's how...

The best way to inform customers that you are raising your prices is to be brutally honest and justify the price increase. If it is now costing your company X% more to get your supplies shipped to you because of higher gas prices, say so. Customers will understand the situation you are in and they will continue to buy from you.

You also want to remind your customers of the benefits of doing business with you. Do you offer better service than your competitors? If yes, quantify how you provide better service (live people who answer the phone, open on weekends, open earlier and/or later than competitors, etc.). Do you offer a superior product? If yes, explain why it is superior and of higher value than competing products. Focus on the benefits of how your product or service makes your customers' lives easier. Prove to them why it is in their best interest to do business with you instead of your competitors.

I am a proponent of raising prices to show your product/service is superior and to position your company and product as being superior to your competition. There is a belief that you get what you pay for, and higher priced products and services must be of better quality.

If you are going to raise your prices, the best way to inform your customers that you are raising your prices is to be brutally honest and justify the price increase.

For example, remind your customers of the benefits of doing business with you. Do you offer better service than your competitors? If yes, quantify how you provide better service (live people who answer the phone, open on weekends, open earlier and/or later than competitors, etc.). Do you offer a superior product? If yes, explain why it is superior and of higher value than competing products. Focus on the benefits of how your product will make your customers' lives easier. Prove to them why it is in their best interest to do business with you instead of your competitors.

If you are raising your prices because of increased fuel costs, let your customers know this. If it is now costing your company X% more to get your supplies shipped to you because of higher gas prices, explain this to your customers. Your customers will understand the situation you are in and they will continue to buy from you.

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Article Tags: belief that, best interest, competing products, doing business, gas prices, proponent, shipping transportation, transportation costs



Related Forum Posts
Re: What is your biggest challenge? Today? - [quote="Alan Mater":3qk869js]No, but it's a good indicator that you'll get good quality. People that provide quality know that they can raise prices due to the quality of their work.[/quote:3qk869js] It is certainly an indicator, but my personal experience after working with many many freelancers, that price is can be a weak indicator. Quite often the reason is some people are much better at marketing and selling themselves, which results in more clients, and higher prices. But their ability to market and sell themselves it not necessarily an indicator of their quality. [quote:3qk869js]Should we let the market determine how much we're worth, or should we tell the market how much we're worth and let it up to them to decide if what we're saying is true?[/quote:3qk869js] The market always decides. The price is not set until a transaction takes place, so you could put your prices where-ever you want but if nobody wants to buy it, then the market has refused that price. Its certainly true some people undervalue their work (just as some over-value), but you can only raise prices as much as people are willing to pay, and as you raise your prices you'll find fewer and fewer willing to pay (market forces). If you can charge more than average in your industry then that is great, certainly you should not lower your prices and I was in no way suggesting that. Its up to the freelancer to try and get as much as they can for the work they do, but market forces will always limit that.
Re: What is your biggest challenge? Today? - [quote="christew":2y9rme1x][quote="Alan Mater":2y9rme1x]No, but it's a good indicator that you'll get good quality. People that provide quality know that they can raise prices due to the quality of their work.[/quote:2y9rme1x] It is certainly an indicator, but my personal experience after working with many many freelancers, that price is can be a weak indicator. Quite often the reason is some people are much better at marketing and selling themselves, which results in more clients, and higher prices. But their ability to market and sell themselves it not necessarily an indicator of their quality. [quote:2y9rme1x]Should we let the market determine how much we're worth, or should we tell the market how much we're worth and let it up to them to decide if what we're saying is true?[/quote:2y9rme1x] The market always decides. The price is not set until a transaction takes place, so you could put your prices where-ever you want but if nobody wants to buy it, then the market has refused that price. Its certainly true some people undervalue their work (just as some over-value), but you can only raise prices as much as people are willing to pay, and as you raise your prices you'll find fewer and fewer willing to pay (market forces). If you can charge more than average in your industry then that is great, certainly you should not lower your prices and I was in no way suggesting that. Its up to the freelancer to try and get as much as they can for the work they do, but market forces will always limit that.[/quote:2y9rme1x] Valid points on all ends. I appreciate your insight and experience. Do you have any tips for forum members on where the best place would be to find a reasonably priced freelancer that provides quality service, other than those already mentioned?
Re: Is Gas Price Affecting Your Business? - over valued housing market + increased inflation is starting to make an impact on consumers spending. inflation helped by fuel prices.
Re: What is your biggest challenge? Today? - [quote="christew":1f5i0uox][quote="Alan Mater":1f5i0uox]The question of quality comes into play at this point. [/quote:1f5i0uox] Yeah quality is often correlated with price, but paying more won't always guarantee higher quality. If you look around there is a huge amount of great writing talent that work at good prices. I was once one of those writers (started at $3/post) before I eventually ended up doing my own thing. The internet has empowered almost anyone to become a writer very easily, which has opened up the job market, pushing down prices considerably.[/quote:1f5i0uox] No, but it's a good indicator that you'll get good quality. People that provide quality know that they can raise prices due to the quality of their work. But, as you said, because of the competition these days, the prices are low and forcing people to charge less than they normally would. It's finding the balance between the price you want to pay and the quality you want that can be a challenge. You may have to go through several different freelancers before you find one that will be your long-term provider. I have a client I write articles for at very minimum prices. I don't mind it, though, because it's not my main service, and I know I'm helping the client out with getting more work. He has to charge lower prices because of the competition, so in turn I get paid less. This brings up the question: Should freelancers lower their prices just to please the market and risk losing money in the long-run? A problem I see is that people under-value their work too much and to the point where it's really not worth doing anymore. I would much rather keep my prices a bit higher and continue to provide outstanding service, rather than depreciate and devalue myself. Should we let the market determine how much we're worth, or should we tell the market how much we're worth and let it up to them to decide if what we're saying is true?
Re: Starbucks and Real Estate - [quote="Takuya":39xglj53]I don't think I am the only one to notice this but every corner a new Starbucks erects, it raises the property value or seems to raise the perceived value, don't you think?[/quote:39xglj53] Hi Takuya, While I'd assume that having a Starbucks on your block would raise the property value, I'd also think having too many locations would saturate the market and somewhat take away from their allure/prestige/brand experience. For instance, if there was a Royal Doulton shop everywhere I went, I would no longer perceive their kitchen accessories, crystal and glassware, fine china collectibles, etc. as being "special" or worth the outrageous prices they charge. I'm not a coffee drinker, but I view Starbucks as the most prestigious coffee chain in Toronto along with Timothy's, followed by Second Cup and then Tim Hortons being for the average joe/blue collared worker.


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