How to raise your prices and keep your customers

ALL businesses need to raise their prices from time to time. There are many reasons - higher costs, improved performance, a need to fund expensive research or a repositioning of the product/service. However, it is important to realise that these reasons are all company-centric. Selling, and keeping customers loyal, is about being customer-centric. Customers do not like price increases, so how you implement them is important to your future prosperity. Badly handled price increases can ruin a perfectly sound business.

For example, in 2015 pharmaceutical company Valeant Pharmaceuticals International acquired two life-saving heart drugs, Isuprel and Nitropress, from its competitor. As soon as it had done so, it raised the prices of the two drugs by over 500 per cent and 200 per cent respectively.

This price increase was not due to improvements done on the products or an increase in manufacturing cost. The only change was the drugs' ownership. This is a prime example of what not to do when it comes to raising prices. This move was heavily criticised by both customers and politicians, and Valeant's stock fell by roughly 90 per cent. The now-departed CEO admitted that the price rise was a mistake.