The 2 ways most businesses use to increase profit margins are to either increase sales volume or sell at higher prices. The more popular approach is to increase quantity sold by running flash sales. What if there was a way to sell more and at a higher price point? Many businesses have adopted the practice of sending out a price increase letter prior to the actual price increase.
Price increase letter is a formal notice that businesses will send to their customers to inform of an imminent price change in their products / services. Now you may be wondering as an e-commerce store, why would I want to notify customers of something "negative”?
Able Carry, a backpack company, took an honest and transparent approach when informing their entire subscriber list of an imminent price increase. They explained the reasons behind the increase and invited customers to place orders for their products in stock at current prices. This approach helped build trust and loyalty with their customer base. By communicating the price increase in advance, Able Carry showed that they valued their customers and were committed to maintaining transparency in their business practices. The company's decision to inform their customers of the price increase beforehand was a successful case study in building customer loyalty through honest communication.
1. Good relationship maintained
Rather than giving their customers a surprise with a sudden jump in price, price increase letters are a good way to inform your customers so that they know the reason for increase and are financially ready. This way, good reputation is maintained and customers are not alienated.
2. Boost sales
By sending out a price increase letter stating when the price increase will happen, it creates a sense of urgency in customers to purchase your products while they are cheaper. Hence resulting in an increase in profit margins. A good example of a store that practices this is Able Carry, a Hong Kong brand with stores on Shopify. They practice a honest to goodness approach by informing their entire subscriber list in advance of an imminent price increase, then invited customers to place orders for their products in stock at their current prices. This is something your store should emulate too!
If you're thinking of how to increase all your product prices in the event of a price increase, easily do so with Konigle's Bulk Price Editor tool!
You can schedule a price change to increase selling price compared to current selling price OR cost price. After doing so, you can then proceed to send out an email to your subscriber list informing them on when the increase will happen, the reason for increase and inviting them to make last purchases before the price increase.
Here are is a video of how to use Konigle's Bulk Price Editor tool: