Time for Change: Picking the Right Time to Increase Your Prices
Your marketing 101 tells you that pricing is one of the most important parts of the mix. True enough, people are drawn to cheaper prices. It is one of the most obvious factors that help them form their buying decision. With that, any change you apply to your pricing can certainly affect the behavior of your customers. You may attract them more or you may drive them away. In a nutshell, pricing is one of the most sensitive areas of doing business. Applying changes to it should be done with utmost care if you do not want to risk losing your customers.
You do not just increase prices. Your case for it should also be built be upon definite factors. That way, it will be much easier for you to justify to your customers the change. When you are deciding on the price of your products, you are actually basing it on a set of circumstances and constants. The same should be done when you are planning to increase it. If you are looking for the right time to increase your prices, here are some guidelines to look into.
Check your competitors
One of the easiest ways to determine the right time to increase your prices is by checking your competitors. When most of your competitors are doing it, this evidently means that there is an industry shift, and you might have even noticed it in your production (the increase in raw materials and the like). You can increase your price, but make sure there is a ceiling so that you will not become much more expensive than your competitors — unless you have proof that your products are much more superior than theirs. You can use price tracking tools to make things easier.
Do it when your customers are satisfied
Increasing your prices when your products and services are getting a bad rap is a bad move. You are only driving them away from your business. When you are planning to increase the prices, time it wisely. Go for the season when everyone is raving about your products. The demand for them increases when everyone is buying your product. As the basic economic rule says, you have the right the increase your prices when there is a high demand for your products.
Modify your products
When you are planning to increase your product prices, make sure that there are some changes in the item. Customers will always want to see the justification behind the increase. You can add weight to the dough of the doughnut, for example. You may want to improve the packaging’s function. Make sure there are noticeable changes.
Price increase is a subject that many businesspeople do not usually want to talk about. For most of them, an increase is just a means to earn more. But, it should be thought of as a measure to counterbalance the demands of your operations and production. With all these things, you should implement the increase with utmost care.