As an entrepreneur, one of your biggest challenges concerns how and when to make your customers pay more for products or services of your company. This is because the way you increase or reduce pricings can mean the potential loss of customers and put you in a vulnerable position before your main competitors.
However, in most cases your company has no alternative but to continue with rising prices. Therefore, here are some tips and smart alternatives to raise prices.
• Do not delete promotions
While most consumers know the exact price they paid for an item, it is common to remember if it was a good purchase decision and from that generate a position on the product or service.
According to the business section of the newspaper Wall Street Journal, companies must maintain their prices and reduce the time in which they offer promotions or discounts in order to prevent rising prices and mitigate the decline in earnings caused by offers.
• Keep or raise the quality and quantity
Never try to make more profits by lowering the quality of your main products or services, because that attitude will irritate consumers of your brand.
In this case, experts recommend that you keep the quality of your product and serve to market a cheaper, lower-quality product online, so you can meet the needs of other sectors of society.
Another initiative that rarely succeeds is to reduce the amount of product that the customer receives but in a similar package at the same price. A soft drink can lose a few millilitres or there may be a few less biscuits in a packet. The price does not go up, but what you pay per unit.
The reason this does not work is that most of the cost of a product is usually with the packaging, transportation and other aspects of production outside the product itself. As a result, reducing the amount is unlikely to influence the results of the company.
• Price Up
When you decide it is time to increase the cost of your product or service, you will need to take into account the expenses that you incur at the time and how they may affect you in the future.
Companies should also make it as clear as possible the reason for the increase. They should tell customers if it is due to higher costs of ingredients or transport, for example.
Research shows that consumers respond not only to the price, but what they believe is right. If they feel that a price increase is linked to your desire to increase their profits, they will consider it unfair.
• Keep an eye on the competition
When you take a new product to market, ask yourself if it is a good time to raise your prices, because consumers will know that your business is doing its best to meet their needs.
At this point you need to keep an eye on the decisions of your main competitors, as the rise can be converted into a price battle where no one wants to take the first step, even if the whole market is facing the same cost pressures.