How to increase your prices and reduce customer discontent

With the VAT change in January 2011, catering and hospitality businesses are faced with how to increase prices without upsetting or losing customers. Some will invariably increase prices without any consideration to customer dissatisfaction, whilst the majority of businesses will look to accommodate their customers best interests and have a strategy for a smooth and trouble free transition.

One approach is to launch new products. It may sound like a lot of work at first, but actually, with a few simple steps you can create a fresh twist to (re-priced) products that your customers will love,.

For example, if your Cafe is currently offering two cup sizes – regular and large -, rather than just altering the two prices, why not introduce a medium size cup and rename all three coffees; Primo, Medio and Maximo. Instantly the customer has 3 new products to choose from, the change in name options makes it harder for the customer to relate to the previous values. It also gives the customer a larger choice.

If you own a restaurant, consider reviewing your product descriptions to better illustrate value for money. For exmple, if you are using british farm assured Cumberland sausages, rather than calling the dish - sausage and mash, say - British Farm Assured Cumberland Sausage & Organic Mash. The customer perceives a better quality product and understands the costs associated with it, and so feel they are getting better value for money.

If you are planning to simply apply the 2.5% VAT increase, ensure that you communicate with your staff clearly, avoiding anxiety on how they should be dealing with unhappy customers. Update your tariff boards, check your menus, tills and receipts to ensure conformity and avoid confusion.

Whilst most customers will accept the VAT increase, to ease the pain by having a planned price increase strategy can only help to ensure that your customers will continue to come and enjoy your hospitality.