In the current economy, almost every company is facing intense pressure to lower their prices. When times are tough, everyone wants a deal.
As a result, most corporate leaders are just hoping to maintain their prices, and are certainly not considering lifting them- but in my opinion that’s exactly what they should be looking to do. Despite what they may say, most customers do not abandon a company when it lifts it’s prices, and even a small increase in the price of your product can make a major difference to your net profit, as any increase usually goes straight to the bottom line.
But how do you lift prices in a way that works? Here are three ideas worth considering:
1. Explain why the price has risen
Customers can be very understanding about a price rise when you take the time to explain why it happened. Talk about the rise in your costs of manufacturing or delivery. Point out how long it’s been since the last price raise. Show them any adverse change in the currency of your overseas suppliers, if appropriate.
When you take the time to let them know some of the reasons behind the price hike two things happen: they complain less and they feel more respected (after all, how many companies bother to contact their clients about price rises? Very few).
2. Offer them a bonus to accompany the price rise
This is a wonderful technique for nullifying your client’s price rise concerns. Announce that the price has risen for the product or service, but simultaneously announce that you have upgraded what they are getting. Say yes, it now costs more, but look at what is now included.(Of course, you build any extra cost of that enhancement into the new price, so that you still have increased your margin).
It’s not hard to think of little extra’s you can add to make the new version of the product more appealing. They don’t have to be earth shattering, just beneficial to the customer.
3. Give them advance notice of the price rise
This technique works in two excellent ways. Communicate the advance notice well and the customer feels appreciated and valued that you took the time to let them know about it. Secondly, they will often rush in with purchase orders before the price goes up! I have seen this happen many times. In fact I know one online financial education company that uses this price rise announcement method as their primary way of getting sales. They have found that many potential customers procrastinate for months wondering whether to buy their course or not. But as soon as they announce that the price is rising, a myriad of sales suddenly come in. Once they worked this out, the company made sure they announced a price rise 3 times a year. Each time they got a lot of immediate sales.
So in conclusion, don’t give in to the prevalent negativity around the pricing of your services. If you’re smart you can lift your prices in almost any economic environment, including this one.
This article was originally written by website The Fortune Institute.