Customers Prices, Add Value, Business Timing Tips, Labor costs
How to Get Away with Raising Your Prices
Reduce Your Costs & Bundle Products Article
9 Nov 2018
Common sense says one of the best ways to please your customers is to lower your prices. However, we live in a world with continually advancing technology, ever escalating materials and labor costs and of course, inflation. This means we’re more likely to have to charge more than less in the long run. Implementing price hikes can be done successfully, if you do it right.
How to get away with raising your prices guide
Here’s how to get away with raising your prices.
Timing Is Crucial
When you were growing up, you probably learned the best time to tell mom or dad about the scratch you put on the family car was when they were in a good mood.
Similarly, when you start considering a price increase, it’s a good idea to take the temperature of your customer base to see how satisfied they are doing business with you. Rather than imposing a price increase out of the blue, ramp up your customer service efforts and do everything you can to increase customer satisfaction for several months before rolling out the new pricing structure.
Customers are often happier paying more when they feel they’re getting more in return. Find ways to add value to your offerings, whether it’s instituting a free shipping policy, free gift-wrapping, or some other service you can provide at a nominal fee.
The idea is to give the customer more, without increasing your overall costs so your margin is broadened. If you’re manufacturing your product, consider upping the quality enough to justify a price increase, while leaving yourself enough room to widen your profit margin.
Reduce Your Costs
If you can source your product for less or pay less for ancillary services while keeping your retail pricing the same, you’ll implement a price increase without disturbing your customers at all. As an example, if you need to accomplish an ecommerce site redesign, rather than paying to build a new one from scratch, go with a free website template to lower your expenses.
Bundle products so you can charge more overall If your product line is conducive to doing so. For instance, if you sell quality electronics online, create packages that include all of the cables or other ancillary items the customer is likely to need anyway. If you sell cosmetics, consider bundling sponges, brushes and cotton balls as a kit with appropriate core makeup items.
You can charge more, while still potentially saving the customer money, if they made all of the purchases separately.
Repackage Your Goods
Those of us of a certain age can recall when candy bars were much larger for less money. This is a tactic often employed by restaurants as well. Pricing stays the same, but portion size decreases. Or, pricing goes down, but portion size decreases even more significantly.
In other words, instead of charging more, reduce the amount of product you provide at a given price point. That 12 pack of batteries you currently sell at $10, becomes a six-pack at $8 and so on.
Go After a More Affluent Customer
With a price increase—regardless of how you position it—will come the loss of a certain number of customers—it’s inevitable. To offset this loss, you can revise your marketing effort to attract a better-heeled customer; one likely to be more accepting of the higher price.
Warn Your Customers
When a price increase is inevitable, inform your customer base of the impending rise. Tell them about the higher costs you’re experiencing and let them know you’re doing everything possible to increase value, so while they will be paying more, they will also get more as well.
Consider The Future
Anticipate additional increases. If they’re on the horizon, take them into account with the first round of increases. This way, you can avoid instituting an increase today, then having to put your customers through another surge three months later.
People are seldom happy paying more. But if you follow these guidelines, you can get away with raising prices while holding on to as many of your customers as possible.
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