Winning Pricing Strategies for You and Your Customers by Myra L. Corrello
January 1, 2009
Today we are faced with enormous changes in our economic climate. Prices, in part due to the rising price of oil, are rising on everything. In turn, we are paying more for everything in our businesses. Our expenses are rising.Have you adjusted your pricing to compensate for your increased costs?
Many business owners are reluctant to raise prices for fear of alienating good, long-standing clients. This reluctance can drag on for years and slowly erode your profit margin till you are practically working for nothing.
Raising your prices is one of the most important tools you have in managing your profitability. There are even measures you can take to mitigate any negative reaction from existing customers if you execute them properly.
First, let’s review some important principles of pricing:
- The more distinct your product or service is in a way that your customers care about, the less price sensitivity you’ll encounter. People will pay more for something if it’s giving them what they need or want and they perceive there are few or no good substitutes. Seek to “brand” your uniqueness and find effective ways to communicate your distinction.
- Add value to your existing product or service by combining it with a complementary product or service to create packages.
- Carefully plan a price increase so that you, your staff, and your customers have time to adjust. You can create goodwill, yes, goodwill even during a price increase if you handle it properly.
How do you create goodwill with current customers during a price increase?
- First, start by setting the price increase a few months out. Three months gives you a good working timeframe.
- Next, create a pre-increase sales promotion program. Communicate with all your customers, the more personal the communication the better, about the increase and suggest they stock up on your product prior to the increase. A sense of time-urgency is a powerful motivator.
- Be prepared to have lots of orders the day before the increase! By contacting your customers personally, they will perceive that you care about their welfare and value their patronage.
- Consider offering a bulk-purchase discount, if you don’t already, to make their stock-up strategy even more beneficial.
Raising prices is a stressful issue for most business owners but it is the most efficient way to greater profitability. Just remember to plan your process well, use it to reconnect with your customers in a positive way, and offer your current customers an opportunity to adapt to the change.
What specific activities could you plan for to make a price increase a successful experience?
Myra
Helping Individuals and Organizations Increase Their Image, Influence, and Impact
MyraCorrello.com
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