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Ask Jo Malone: The key lessons to learn when putting up your prices

Via Evening StandardSmall business agony aunt Jo Malone explains how to introduce price increases and keep customers happy.

Dear Jo

I’m a freelance tutor teaching languages in Kilburn. I work with adults and kids and get most of my new clients through word of mouth.

My wife recently lost her job so I need to put up my fees, which have been static for the past 10 years, but I have to pluck up the courage.

How much is reasonable to increase prices by and what is the best tactic to introduce them?

I could just charge new customers more but word might spread.

No matter how big or small your business, price increases are a reality due to rising costs. All of us are in the same boat when it comes to the cost of daily life. This is seen everywhere from a pint of milk to your annual holiday or tutoring your child.

However, not having reviewed your fees for the past 10 years you need to think carefully about how you approach this.

For example, you can’t just put up prices because your personal circumstances have changed, although I can totally sympathise with your situation. It must be part of your overall business strategy.

Plan to up your prices annually without pricing yourself out of the marketplace. You may find staggering your price increase easier. Maybe the start of the school year, the first week of September, is a good time.

Notify everyone ahead of time and maybe offer, for your long-standing customers, a course of 10 lessons with a discount. This way the payment is upfront and it gives you working capital. Make sure there is a cancellation policy in place and an expiry date.

Have you thought about writing a blog or producing worksheets/learning aids for homework? This might be a way of subsidising your income. Or small classes, groups or night classes for students.

It’s very important when increasing prices to add value for the consumer without adding costs to yourself. This often takes a lot of creative thinking but sometimes some of the best ideas come from this process.

…and Jo asks

Colin Hegarty, founder of Hegartymaths, says: “Given your prices have not increased for the past 10 years, but no doubt your cost base will have, it is only fair to increase your prices to reflect market conditions and to ensure you and your family get the income you deserve for your expertise and hard work.

“One way of doing this would be to look online at the many marketplace platforms that connect tutors and students and decide what is the market rate in your location for your specialism and qualifications. It would not be unfair to match the prices of the competition.

“I think the best way to deal with price increases is total honesty as to the reason you are doing so.

“I feel different prices for different customers can cause more problems than it’s worth. If there are differentials in services you provide then that is where different prices might be appropriate.”

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