Price increases are a fact of life in most businesses, but there are some ways to manage them that can help you avoid most, if not all, of the pain.
- One strategy is to increase prices only on new orders or on existing stock when it is reordered explains Peter Decaprio. This technique takes advantage of your stockpile while protecting the customer from being gouged for something they have already bought.
- If you have an eCommerce website, consider offering customers coupons for 10%, 15% or 20% off their next purchase when they pay full price for an order now. Also if this coupon expires 30 days after it’s issued, fewer customers will use it immediately after your price increase and you will lose less money in sales volume. If they do not use it, they will come back to your site and you’ll be front of mind when they do.
- Another strategy is to offer customer loyalty discounts to those who consistently pay full price every time their favorite product goes up in price. They might get 10%, 15% or 20% off, depending on how much money the business stands to save by offering this discount instead of a coupon that can be copied and passed around (and even sold for cash).
- Finally, if you want people to see your brand as affordable and not gouging them like other businesses might, consider taking the hit rather than putting the whole burden on your customers. By letting them know you understand what’s going on with inflation and market changes and are willing to absorb some of the price increase yourself, you will have a leg up on your competition.
- People like to know they’re not being taken advantage of. And that businesses are willing to take a hit instead of passing it all on to them. There will always be customers who leave in the wake of any price increases. But offering discounts and loyalty programs can help soften the blow.
- Consider reevaluating each product’s pricing every six months or so and see if it’s time for another increase (if appropriate). This helps customers budget and plan better and gives you a chance. To make sure your margins aren’t getting out of hand; if they are, you can cut back some prices before consumers catch onto it. And start looking elsewhere for their favorite products.
Q: Where can I find more information on this topic?
A: This article was inspired by the [article on increase in price]. Please not that some images were taken from Shutter stock and articles mentioned in this writing. In case you want to go read their material says Peter Decaprio. A new version of this article has been submitted to Inc. Magazine for consideration. If you would like to discuss any of my ideas outlined here, please reach out!
Q: What is the best way to increase prices?
A: This question has been extensively analyzed by professionals from all manner of businesses. A recent [article] went into great detail about the “best” practices for price increases, but a good rule-of-thumb is to keep it simple and only increase a small percentage at a time so your customers don’t really notice.
Q: What should I avoid doing when increasing prices?
A: The things to avoid are making sudden increases in price while trying to be deceptive or manipulative. If you attempt this without proper support from product/marketing managers, it could have negative effects on future sales. Because people will catch onto your tricks and assume. That’s what you’re going to do every time you put up an almost-new product.
Q: How often should I increase my prices?
A: This is entirely up to the business. If you are effectively increasing your sales volume each time, or if costs are shooting through the roof. Then it’s probably time for another price increase. If you think people will jump ship after one price hike, don’t chance it! Indexing changes in costs can protect businesses that have loyal customers but are getting squeezed by higher prices elsewhere.
Q: How can having too high of a price point hurt my business?
A: Everyone has heard the saying “you get what you pay for”. There’s truth behind that because brands that charge more for their goods and services. Tend to be viewed as higher quality than those who don’t come with much fanfare explains Peter Decaprio. If you want your customers to continue seeing the value in your goods and services. Keep prices at a reasonable level. Where they can feel like they’re getting their money’s worth instead of being taken advantage of. By some fly-by-night business posing as an alternative.
As always, I hope you enjoyed reading this article. And it sheds some new light on a topic you might not have thought about too much before. If you would like to discuss any of my ideas outlined here, please reach out!