Increasing Your Pricing: If, When And How
It's a difficult decision ...
POSTED BY JACQUI FROST ON 20/10/2016 @ 8:00AM
Increasing the pricing of goods or services can be necessary in certain economical regards or it can be effective exercise at improving profitability. Whatever your reason, it's a difficult decision that can be a huge risk ...
Whatever the reason for increasing your pricing, it's going to be a difficult decision!
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Supply and demand must play a crucial role in your decision. Upping your prices to allow your business to function with fewer customers can have huge benefits.
"You'll have more time for the customers you keep, developing your business and looking after yourself!"
One of the most common indicators might be if customers are frequently surprised by your prices. In this case, a price increase might lose some of your 'super saver' customers, but those that value your business will happily pay the increase, and they might be your most valuable customers anyway.
It's often seen as a positive to deliver at an affordable cost; however, it could mean that you are undervaluing your work. If your customers are always impressed with the results and comment that you've done more than they could have imagined, you should probably reconsider your pricing!
Research your competitors when deciding on your own pricing structure. There's 'being competitive' to consider, but also consumer perception. It's a balancing act because customers will go for a bargain but they'll also associate price with quality.
If you're charging more or less than your competitors, potential customers will wonder why, and the answers will be added to their reasons to enquire ... or not to enquire.
"A controversial, but no doubt common reason for a price increase is to up your own salary!"
No matter the details, this is something you should be very careful with. We could get very science-y here, but it's not really the place, so you'll just need a little trust; it is human nature to be able to - very easily and without knowing it - find or invent reasons to make the choices we want to make and to convince ourselves they are the right choices.
If you're very comfortable with the idea that you can trust yourself to choose your own fair and justified salary, then ask yourself which employees you'd trust with that same choice and why (or why not)? You need to be very sure that your reasoning is objective, and that you - as an employee - are worth that salary.
Whatever the situation, you'll want to assess the reasons for upping your prices carefully. We'd suggest the following method:
Step 1: Write down every reason you can think of for the price increase. That includes value, competitors and those "I want to be able to afford a nicer car" ideas. Write every reason you can think of, no matter how small, and be brutally honest.
Step 2: Use that list of reasons to write a customer communication about the price increase. This will be more useful if you can pass the reasons to someone else. If you're doing it yourself try to write it on autopilot, without thinking about it.
Step 3: Receive that customer communication. That means to receive it as a customer would. This means without any internal company knowledge and without any increase in value to you personally, assuming the price is the only change. This is why it's helpful to get someone else to write it.
Step 4: Now analyse. How would it make you feel as a customer? How do the reasons in the communication compare to your original list? Are any of the reasons highlighted, downplayed, excluded or otherwise notable for the way they are included? If they are, why? Have you made reason A more prominent to draw attention away from reason B? Have you excluded reason C entirely because it's something you wouldn't want your customers to know?
If you realise that a price increase isn't the right choice then you can accomplish similar results by cutting costs or growing your business.
If you'd like to know how we can help with those two options call Genie Kelly on 01604 529170 or click here to send us an email enquiry and ask us to contact you.
Until next time ...
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