- SHOULD YOU ACCEPT CRYPTOCURRENCY PAYMENTS
- HOW TO INCREASE OUR PRICES?
- PRICING STRATEGY: PRICE SKIMMING!
- PRICING STRATEGY: GIVING YOUR PRODUCT/SERVICE FOR FREE
- WHAT IS DRIP PRICING?
- WHICH AMOUNT SHOULD YOU CHOOSE FOR YOUR PRICES?
- DETERMINING YOUR HOURLY RATE BASED ON THE VALUE YOU THINK YOU HAVE
- IS LOWERING YOUR PRICES A GOOD IDEA?
- TO OFFER OR NOT TO OFFER FINANCING?
- HOW TO PROTECT YOURSELF AGAINST EXCHANGE RATE RISKS
- WHEN IS A GOOD TIME TO INCREASE YOUR PRICES?
- DEMAND BASED PRICING
- WHAT IS A LOSS LEADER?
- ARE YOU USING REBATES? WATCH OUT FOR THESE
- HOW TO USE FREEBIES
- HOW TO CHARGE FOR YOUR PRODUCTS / SERVICES?
- HOW TO DEFINE YOUR PRICING STRATEGY: PRICE POSITIONING
- HOW TO DEFINE YOUR PRICING STRATEGY: MARKET PRICING
- WHAT PRICE SHOULD YOU SELL AT? - COST-BASED PRICING
HOW TO INCREASE OUR PRICES?
NEXT ARTICLE:PRICE SKIMMING!
I am talking to you today about a topic that I am working on right now: price increases.
Whether it is because we had planned an increase for our business, because of an increase in our demand, changes in our market conditions, to stay ahead of the cost of living, or because of an increase in the cost of our raw material, we are often called upon to revise our prices.
Of course, the easiest way is to simply increase our prices. And the start of the year is often a good time to announce such an increase. However, by how much should the increase be?
To increase our prices, we need to go beyond our country's inflation rate. Normally, government authorities will give you these figures. I am in Canada, so the reference site is Bank of Canada. If the key indicators give us an inflation rate of 1.3%, increasing our prices by exactly that percentage is to keep them the same. If we want to increase your prices, doubling the inflation rate, up to 5%, can be done without much explanation. However, if we are in a very price-sensitive market, even this level of increase may need justification.
Beyond the above increase, and for price-sensitive markets, we will need to justify the increase. Depending on the reason, few or no clients might be unhappy. Success is often in the presentation, the timing, and the execution of the increase. You can even use this to boost sales by having a "take advantage of the old price until XXX" promotion.
Another way to make this increase easier on our clients is to do it regularly. The increase becomes expected.
But is this the only way to increase prices? No. There are several others. Here are a few :
Do some of these strategies fall under "drip pricing"? In my opinion, having addons is not a problem. The problem is with the transparency on these additions. If a customer wants to buy our product or service and they learn as they go through the buying process how much it will cost them, this is a problem. The price of goods/services should be clear from the start. And if this is not possible (for example, the cost of delivery may change depending on the distance), be clear. The customer does not want to start ordering a new house based on a price 'X' and then learn that there are extras for doors, windows, finishing materials, etc. But to say: the 'X' model house costs a set amount. And if you want a fireplace, add 'Y'. A second bathroom, add 'Z', brick on all four exterior walls, another addition. This is not a problem in my opinion. We did not trick a customer by promoting an extremely attractive price and subsequently make the final price for what they initially wanted to be higher than the one displayed.
If you want to adopt this strategy, check with an expert/lawyer/government agency who can tell you if your pricing policy complies with the rules in place. The few dollars invested will give you peace of mind.
If you have any questions or comments, please do not hesitate in contacting me.
Stéphane Elmaleh-Riel, B.Ed., MBA