Raising prices as a business owner may seem daunting and scary, but it doesn't have to be. This might be the last item on your list for this year because you're unsure how your customers will react or if there’s a magic formula for successfully increasing your rates. As an accountant, I’ve had the privilege of looking under the hoods of hundreds of businesses across the country, and today, I want to share a framework that can help you navigate price increases without spooking your customers.
The goal here is simple: improve your value and, in doing so, justify your price increase. Many entrepreneurs make the mistake of raising prices without thinking through the implications, often attributing the change to rising costs or economic pressures. But trust me, your customers see right through that. Let’s break down the three key components of the 3E framework.
The first E stands for Experience. Think about what your customers experience when they interact with your business. Are they greeted with warmth and professionalism? Do they feel taken care of? I know this might be a weird example, but it works perfectly for this topic, so, bear with me here. Think about the Barbershop experience. A good barber knows that the experience goes beyond just cutting hair; they offer hot towels, head massages, and pampering. This isn’t something they HAVE to do. They could cut your hair, take your money, and boot you out the door while hollering, “NEXT!”. But when a company or individual goes above and beyond to make you feel valued, seen, and even pampered, you’re going to be much happier paying extra for that type of experience.
You need to ask yourself: "What is my customer experiencing?". Are you running a well-oiled machine, or are you just churning and burning as many customers as possible, leaving them all to feel neglected? People CRAVE human connection, especially in today’s fast-paced world. If you create an experience that makes your customers feel special, they will be more willing to pay extra.
The second E represents Emotion. Every purchase is driven by some form of emotion—excitement, anxiety, or even fear. If you can identify and transform any negative emotions into positive ones, you can justify your price increase. People want to feel good, especially when times are tough.
When your customers walk through your doors, virtual or not, they should be able to leave their worries behind. If you genuinely care about your customers and make them feel valued, they’ll happily pay more for your products or services. If you simply increase your prices without making your customers feel appreciated, you risk losing them. They’ll see it as just another drain on their wallets. Remember, there is always someone with cheaper prices than you. Well—unless you're Aldi, but I digress.
The third and perhaps most important E is Ease. Make it as easy as possible for customers to buy from you. The simpler you make the purchasing process, the more your customers will be willing to pay. In our busy lives, people value their time immensely. They want things to go smoothly so they can get back to what they do best.
I’m going to give you a challenge to find out where your business falls on the ease scale. Take a moment to walk through your buying process as if you were someone looking to buy your product for the first time or a client who is looking to buy more products or upgrade their services. Are you feeling frustrated by a slow and painful onboarding process? Was the sales team impossible to hunt down? If so, it’s time to optimize, my friend. Only after you’ve streamlined the buying experience should you consider raising your prices.
I often see businesses rush to scale without first focusing on the 3E Framework–customer experience, emotion, and ease. Many entrepreneurs get so excited to scale that they run out the door as fast as they can to throw all of their money at expensive ads and marketing techniques to bring on new clients—without having built a product worth buying. Here’s the bottom line, if you invest in creating a service that genuinely resonates with customers, you can spend less on marketing and charge more for what you offer.
If you found this article helpful, I invite you to schedule a free consultation with one of our accountants. They will review your file and highlight what you’re doing well and where improvements can be made. At Ignite Spot, our goal is to help you lead confidently by empowering you with financial knowledge.
Take the first step towards building a better business use the button below to schedule your free accounting file assessment.