5 Things to Consider When Raising Prices
Raising Prices? Think your customers will notice? Printers can learn a ton from the recent Netflix price increase.
You think our industry is changing! The old, crusty movie rental industry is changing even faster. First there was brick and mortar, then mail order, kiosks, on-demand and now iPhone downloads. Netflix has instituted its second major price increase—a 60 percent increase—in less than a year and customers are complaining big time across the Internet.
Netflix is taking a gamble with a bunch of loyal, but less profitable, customers. No one knows how many will walk. No one knows if this is the catalyst for a mass exodus to Redbox or piracy sites, but my guess is that Netflix knows what it is doing. Netflix sent a message to its loss-leading customers, but will there be a backlash? Only time will tell. The company is blending price increases with more value-added service options to approach this challenge.
Raising prices is a fact of life for any business, and how you handle it could make or break you.
A few years ago, a printer conducting an annual customer survey noticed several customer complaints about it raising prices. Many said they were buying somewhere else now, and others noted they were shopping around. The owner went on to explain to me that he raised prices about 20 percent over six months because of an ugly lease situation that was putting pressure on his business. He felt he could slowly raise prices unnoticed. Ooops!
It just so happened that sales were slipping as well. The owner immediately went into damage control to explain his situation to key customers in hopes they would understand. He felt he had to delicately explain what was going on in hopes many of his larger customers would stick with him. The better thing would have been to be proactive before or during the time when the increases were happening.