How to Raise and Lower Prices Without Alienating Customers
- Deciding how much to change prices: Most price hikes are done in stages on the theory that customers will be accustomed to higher prices over time and be willing to tolerate them as they become more loyal. A series of smaller hikes may not even be noticed by customers who be seriously put off by a single large one. If you have more than one product, consider raising prices on some items while leaving the others the same, or even lowering them. Some customers are sensitive to the slightest price hikes for a particular item while mostly ignoring other increases.
- Picking the right time: If you decide to raise or lower prices, you must pick the right time. If you’re lowering prices, choose a time when the change will have the most impact; if you’re raising prices, choose a time when you’ll encounter the least resistance. Your business’s seasonality, growth stage and sales cycle affect your choice.
- Changing value and price: You can change the pricing and leave the value alone, or you can change the value and leave the pricing alone. You can also change both value and pricing or leave them both alone. Any one of these changes can be tailored to have the same impact on your bottom line, at least on an individual unit basis, but they may have vastly different effects as perceived by customers. Many businesses get the best long-term results from increasing price and value. Others find that they can cut their own costs while increasing value and thereby offer an almost irresistible proposition to customers-a powerful recipe for growth, indeed. The key lesson about value and price is that these elements can be adjusted to move demand and increase sales without changing what it actually costs you to make a product. Careful attention to what happens when you move pricing and value points can show you the way to pain-free, profitable growth.