How Can I Raise My Prices, Safely?
Research by the Bank of Scotland shows that only 3% of small businesses
pass on the whole cost of their own rising expenses.
Five different areas can help you put prices up without worrying your customers.
Make Your Prices As Profitable As Possible
Attract Customers Who Want To Pay You More
Put Up Your Prices Sooner - Without Fear
Get The Best Price When Customer Demand Varies
Come Out On Top – Even In A Price-War!
Pricing is probably the most powerful area of change for you.
Most re-pricing projects are low-cost or no-cost, easy-to-use and very quick to work.
Make Your Prices As Profitable As Possible
You can end up with too little profit if you offer discounts too often, or make them too large. Worse, you can gain a reputation for bargain-basement price-cutting – so customers wait for your next sale. This means that you have got into a no-win bind: your margins are low when you have high turnover, but you sell few items when your margins are higher.
Equally, if your prices are too high...
BUT what defines any prices as too low or too high?
Actually, there are many factors that form a price acceptable to customers, and exploring them allows you useful choices.
Make more profits instantly - without concerning your customers:
You would benefit greatly from ways and means to stop accidentally giving your profits away. This means focussing on profit more than on sales volume – and that can mean turning away unprofitable business instead of accepting anyone and every offer.
Attract Customers Who Want to Pay You More
While you seem to be able to attract interest and enquiries, you may have tuned your product range to the sort of customer who is very 'picky'. That will mean you spend too much time and energy on sales and after-sales work. You would do better with people who buy when they are convinced that they are getting value-for-money, and there seems to be more you could do in that area. High-quality service to assist people's buying decisions will help them justify higher amounts than if they approach the process as a self-service choice.
Profit with fewer customers - quickly and safely:
This is most easily done if you aim to be really persuasive that your price is right in the first place. This means the match between what customers want and what you provide is at its best, satisfying both you and them at the same time. You may even find that doing this costs you less in marketing and saves you time as well!
Put Up Your Prices Sooner – Without Fear
While people seem happy to make an initial purchase, too many of them do not renew, repeat or re-order if your price rises push them back to comparing suppliers again. This means that you constantly have to find new customers, with all the marketing costs that requires.
Keep up-to-date with your expenses - and sleep soundly at night:
Getting this message across effectively means you can reassure everyone about your tariff. Your explanations have to be right – this is the key to customer psychology here. Once done, they are simple to repeat and are very quick to work, as well as being extremely cost-effective.
Get the Best Price When Customer Demand Varies
When you use pricing structures that are not the best aligned to your market, it leaves you out of pocket and perhaps vulnerable to a competitor who presents a better picture.
Search for Win-Win ways to keep pace with demand:
If you can find ways to set your fees according to how valuable your service is to the customer, rather than on the basis of any sort of fixed rates, you can gain a lot of flexibility and therefore profit when opportunities arise: align your pricing model to your market.
Come Out On Top – Even in a Price-War!
In a crowded market-place, even when you get lots of enquiries, you have to find ways to be more attractive than our competitors to win the customer – and you could do more in that direction.
Win your price- war without further risk:
Short-term or long-term, you need to set prices assertively against competitors. Firstly, you need methods to avoid the 'race to the bottom'. And secondly, it would help you to seize the opportunities capitalise on the situation for your longer-term benefit – to make more profit AND immunise yourself from future competition.
A Client Says:
“Since working with Dave, we are a lot more analytical about our business, and we evaluate the pros and cons more often and in more depth, in a more objective way. We used to be so busy, we didn't talk to each other enough and we didn't discuss the right things. He has helped us take a step back and view the business from the customer's point of view.
Now we understand what customers value, we have more confidence in pricing our offerings. In one enterprise we have increased the prices by 20% and 37.5%. In another, we have gained at least 500% in takings. All of which is being ploughed back into the business in order to extend it further.
We are much better at targeting profitable market areas with different products that are becoming very popular. It's great to see such growth!”
Ruth & Robert, Lisle Coombe B&B & Event Centre
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Price is “the most neglected area of marketing” Peter Drucker, management guru
You can also work on two other options to maximise your profits:
1. cut your costs (without scaring staff or suppliers)
2. increase your sales volume (within a fixed marketing budget)