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How To Communicate Price Increases Due To Rising Gas Prices

By April 10, 2022June 16th, 2022No Comments

Prices are rising across all sectors, with everything from aspirin to gas costing consumers more. This is especially problematic in any business where gas and energy are the primary means to operate their equipment, keeping them in business. With this new normal, businesses must find a way to continue to turn a profit, which usually means passing the cost on to your customer. So how does a business communicate this increase as gas prices continue to rise?

While there are various ways businesses can incorporate rising costs into their bottom line, one solution that can work well is to offer fewer products or decrease a service in some way, but keep the same price. For instance, a bag of chips remains priced at $4 but becomes eleven ounces instead of fourteen. Or a three-hour boat charter becomes 2 hours and 30-minutes at the same original price. In these examples, sometimes the business won’t publicly declare the change to consumers, opting instead that people either will not notice or have enough brand loyalty to continue to purchase the product or service even in light of the change. As a business, it’s important to not turn customers off from your product/service by simply hoping customers either won’t notice the change or will continue to buy them anyway. This is why it’s critical to communicate with them to let them know what’s going on.

Most of the time you should communicate the change in a way that is direct but also very sympathetic. You can communicate via special banners on your website, social media posts, and at your bricks-and-mortar location with small signage, such as on a counter. Specifically, to avoid blunt customer resentment, here are three actions that owners/managers should take when communicating a price increase.

  1. Call the action a price increase, not a price adjustment, a price change, or another euphemism. In emails and letters to customers, well-loved brands such as Netflix, Microsoft, Sling, and YouTube TV have all referred to a price increase as “updating price” or “adjusting price” in the past.
  2. Explain the reasons for the price increase clearly. When it comes to communicating the price increase, make sure you go into some detail about what the reason is (i.e. gas prices rising), the effects that it has on your business’s survival, and finally why you have no choice but to raise your prices – but your prices will go back to “normal” after gas prices drop.
  3. Give plenty of advance warning. There can even be a few marketing and sales advantages to announcing a price increase well in advance. Not only does it give customers time to adjust their own budgets, but you can use it as an opportunity for upselling. Consider:
    1. Offering to extend contracts at the current rate.
    2. Encouraging on-the-fence prospects to sign before the increase.

Even if loyalty is strong enough for customers to continue to purchase the product/service at the revised price, businesses still must manage customer expectations. One excellent example of superbly customer-centered solutions to this situation comes from a Kansas City BBQ restaurant. This business sought to be completely upfront in all ways possible to their customers, ensuring all possible branding gave customers the same clear message that they didn’t WANT to raise prices and have only raised prices where absolutely necessary to maintain the viability of their business. They also acknowledged that they hope this is temporary and they will do everything they can to still provide the highest quality without unduly passing on expenses to their customers. The sincerity and forthrightness of their message resonated with their customers and sales increased even though the price hike was substantial. 

Regardless of what product or service a business is selling, the focus should be on successfully navigating customer expectations and maintaining that relationship. It’s consumer discretionary spending that is facing shakier economic footing should inflation get worse or the talk of recession loom larger. Inflation, rising prices and costs, and even the consumer confidence index have all become a large part of the current news narrative. The majority of people are aware of how price increases across the board are or will be affecting them, and, by extension, causing more cautious and weighted decisions about how, when, where, and why they choose to spend their money. 

Given the common knowledge the average consumer has of rising prices, the question businesses must ask themselves is whether price increases can or should be passed on to the consumer. The result of keeping a loyal and valued consumer will prove to be worth it by keeping a business’s reputation above board and more than simply afloat (or worse, adrift) in this current stormy economic reality. The fact of the matter is that we are in a time of economic uncertainty. Given this unfortunate reality, the last thing you want is your business’s bottom line or continued success to hang in the balance of this uncertainty. 

Successfully steering clients through this storm is our mission at Charternet. It is one in which we are experienced, capable, and well-suited to handle through a combination of experience, delicacy, dedication, as well as empathy and understanding for both your situation and that of your customers. We are all in this economic storm together and weathering it well could determine the success of your enterprise for decades to come. We can help you provide a well-balanced, forthright approach to continued, successful client relations well into our uncertain economic future.